10 steps to take now to improve your credit rating

How can I improve my credit rating?

If you are currently working on reducing the amount of debt you have, improving your credit score may not be at the top of your agenda. However even if seeking out further credit is not something you want to do in the foreseeable future, it is still important to ensure your credit record is as clean as possible. This is because your credit rating can impact much more than just your ability to take out loans and credit cards. Applying for a mobile phone contract, paying your car insurance in monthly instalments, and even being able to switch your utility bills from a pre-payment meter is all dependent on your credit score.

Poor credit does not have to haunt you forever, particularly if you take positive action to improve your situation. Here are 10 actions you can implement now to improve your credit record for the future.

Obtain a copy of your credit report – Giving your credit report the once-over is vital if you are looking to improve your credit rating. You can obtain your report for free and check all is correct. If you notice anything on there that shouldn’t be you can challenge incorrect information and have this removed from your report. Lenders use three main credit agencies: Experian, Equifax and CallCredit. It is a good idea to obtain your report from all three companies, as each will hold slightly different information and analyse it in different ways.

Attach a ‘notice of correction’ to your report – If there are legitimate reasons behind a period of bad credit, such as unemployment or ill health for example, you can attach a note to your report explaining this. This can be particularly effective if the period of bad credit was several years ago and you can show that these problems are now behind you and you are now using credit in a more controlled way.

Check you are on the electoral roll – This helps bank verify your identity and helps weed out fraudulent applications. This is one of the easiest ways of boosting your credit score.

Limit credit searches – Every time a credit search is carried out this leaves a footprint on your credit report which can be seen by other lenders. A large amount of these footprints over a short period of time rings alarm bells for lenders, as it can appear that you are desperate for credit. If you find yourself being rejected for credit, it is better to ask the lender why you were rejected rather than immediately applying somewhere else thereby having another footprint added to your file.

Sever old financial connections –If you had any joint financial products with ex partners or ex housemates, you may find that you are still connected to that person on your credit report. If your finances are no longer linked, you can get this removed by writing to the credit reference agency. This is particularly important if they have bad credit, as this is likely to be detrimental to your rating.

Show stability – Lenders like to see stability in their prospective customers. Staying at one address for a significant period of time rather than moving around, remaining with the same bank and even keeping the same job for a length of time also helps. If you can provide a landline number as opposed to a mobile on any applications, this is also looked upon favourably.