Five ways to boost your credit rating
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If you’ve ever been turned down for credit, you’ll know how upsetting it feels. Suddenly the beautiful wedding dress, dream car or new home you’d set your heart on is snatched from your grasp. And if you’ve always been careful with money, being rejected for a credit card or loan can make you feel confused as well as frustrated.
Having a poor credit rating is not limited to those with a bad track record in money management. In the current climate lenders are forced to be choosy about who they offer credit to. Even people who have never been in debt before may be seen as a poor risk, because they don’t have any previous borrowing history for lenders to refer to. So if you have never had credit before, you may not have proved that you are bad at managing your debt commitments, but you've never proved that you are good at it either.
But there are things you can do to make yourself more attractive to lenders. Luckily, Sainsbury’s Finance is on hand with five ways to get your credit rating back on track.
1. Get to know your credit file
The only way to know why you’re being refused credit is to check your file. It costs £2 to look at your personal history at the three credit reference agencies Call Credit, Experian and Equifax. It’s worth checking all.
According to Money Saving Expert, the information on your credit file comes from five sources: the electoral roll, court records, search and address data (addresses you’re linked to and other lenders who may have searched your file), fraud data and bank account data (which details all your payments on credit cards, loans, mortgages and mobile phone contracts).
If your file shows you have county court judgments in your name, pay off the debt in full and make sure that records at the Register of County Court Judgments are amended.
Then, if you find any incorrect information on your file which may affect your rating, you can add a notice of correction. This is Money says you can also use this statement to explain periods of bad credit history, such as if you had medical problems or a relationship breakdown.
Don’t be tempted by firms who offer to "clean up" your credit file. According to Times Online, these credit repair companies are well known for charging a fee for information that can be obtained for free at debt counselling services.
2. Get on the electoral roll.
Even if you don’t intend to vote, it’s vital to your financial health that you’re on the electoral roll for the address that you’ve put on the form. To do this, contact your local council. These days there’s even a rolling register for people who have moved, so you don’t need to wait a year until a new list is compiled.
3. Don’t miss any payments.
The Debt Advice Bureau, states that missed and late payments will dent your credit score and may stay on your file for up to six years, but don’t despair. If you keep paying your bills on time for at least 12 months in a row, your negative entries will influence your score less and less.
You should also make sure that family members pay their bills on time too, as this may affect your rating.
4. A little credit is better than none at all
If you’ve never borrowed before, you’ll be invisible to credit agencies so it could be worth taking out a store or credit card, but always making sure you pay off the balances regularly to avoid high interest costs.
Even taking out a 12-month contract with a mobile phone company can help. Keep up with the monthly payments and your credit rating will improve.
5. Leave no footprints
While making one credit application every now and again won’t have much impact, too many in a short space of time doesn’t look great on your file.
Therefore, if you have recently made a number of applications and been declined, wait for at least six months before trying again. In the meantime, get a copy of your file and see what’s on there that could be causing the refusals. Applying to see your credit file won’t influence your credit rating.
Sainsbury’s offer a range of financial services including Life Insurance, Home Insurance, Pet Insurance and Travel Insurance.
