Past financial mistakes can cause people real difficulties in the future
1) More Expensive Loans
A limited choice of options that are typically much more expense
2) Rejected for mobile phone contracts
Much more difficult to get utility and mobile phone contracts
3) Turned down as a tenant
Fewer Landlords will take tenants with a poor credit history
Improving your rating can therefore have real benefits, and we look at the 4 steps needed to do this.
Step 1: Buy a full multi-agency copy of your file
We recommend getting a fully detailed copy of all the information all the CRAs (Credit Referencing Agencies) hold on you.
With this information you can then start to develop a plan for improving your file.
To get your report straight away go to www.checkmyfile.com
Step 2: Make sure all the information being held us up to date and correct
Now you’ve downloaded your report you now need to look through this and make sure everything is as it should be, including:
1. Electoral Roll
Your electoral roll stats does affect your score, and on your multi-agency report, you need to make sure that the information Equifax, Experian and Call Credit hold on you is up to date and correct (and this includes other people registered at your address.
If your electoral roll information is not correct, you can speak to a Check My File Agent on 0800 612 0421 who will be able to help you get this corrected.
2. Payment Mistakes
Other mistakes could be for example missed payments that you did in fact make. Though if there are mistakes, unfortunately you only have 28 days from the time the mistake first appeared to get it corrected.
What you need to do is write about 200 words explaining what something is not correct and what was actually happened, and submit to the relevant CRAs.
Step 3: Other things you can do to immediately start improving your personal rating
1. Limit your number of new applications
This may seem like a strange item, one of the main drivers for improving your rating is to be able to get access to loans and finance. Though failed loan applications do not look good on your file, and the more you have, the worse your file looks.
So if you are going to apply for finance, make sure you do your legwork first, know how your file looks, and only apply to places where you know you will get accepted.
2. Cancel unused cards
This not only helps to improve your financial record score, but will also reduce the risk of you falling victim to fraud (which is very common with cards).
3. Negotiate with existing lenders
If you have existing lenders with whom you have defaults and missed payments, you can try negotiating with them – whereby you pay off some of the outstanding loan in return for them removing the missed payments and defaults from your file.
This does not always work and does require you to have the money to pay off some of the outstanding debt, but if you do have the cash, it is worth a go.
Martin Lewis, from MoneySavingExpert.com offers some additional tips for boosting your credit rating in the following article:
Credit scores: Boost your credit rating – MoneySavingExpert
Step 4: Start successfully making repayments
One of the reasons why lenders put so much weight on a person’s credit file, is that they want to see a history of successful repayments. So the quicker you can start showing this history on your file, the quicker your score will start to improve.
There are a number of ways that you can do this:
a. Credit Builder Pre-Paid Card
Some cards are specifically designed to help you build your score. You are typically loaned a small amount, usually £60. You then sign a credit agreement and pay back about £5 a month. Though there are fees and charges involved.
b. Credit Builder Card
These are like other cards, but the interest rates are higher (around 30 40%) and limits are typically small at around £500.
c. Bad Credit Options
There are many different types of finance available to those who have a with a poor credit rating, these include:
- Payday lending (short term options up to £500, very expensive at APR’s up to 5,000%)
- Doorstep Lending (small options up to £500, monthly repayments up to one year, APR’s typically 275% up to 550%
- Guaranteed Loan (£50 to £10,000, requires a friend or family member to guarantee you repayments, APR’s typically about 600% for options up to £500 and 50% for options from £500 to £10,000).
What is your current rating?
We strongly recommend heading over to the Checkmyfile website to view the UK’s only multi-agency report if you would like an up-to-date view of your credit score.
Once there you will have the option to sign up for a one off FREE 30 day credit report. To view your one off 30 day FREE report, please click here. Alternatively, if your FREE period has expired, you can order a comprehensive credit report for a one-off payment of £19.99 by clicking here.