How to Improve Credit Rating: 10 Simple Steps

If your credit history isn’t as spotless as it could be, a bad credit mortgage is always an option. There’s a fast-growing subprime lending sector in the UK, enabling poor-credit applicants to access competitive deals on a variety of loan products.

Still, there’s no getting away from the fact that a good credit score can make life that little bit easier. You may not need it now, but a time may come in the future where your credit score stands between you and the financial support you desperately need.

Hence, anything you could be doing to improve your credit score is something you probably should be doing. So with this in mind, here’s a brief rundown of 10 simple yet effective strategies for making a real difference to your credit score, starting right now:

#1. Consult Your Credit Report – Rather than burying your head in the sand, it’s essential that you take a close look at your credit report as soon as possible. Note where things have gone wrong, request corrections where errors have been made and determine the most obvious areas for improvement.

#2. Set Up Automatic Payments – One of the easiest ways of eliminating missed payments from the equation is to set up automatic payments with your bank or building society. It’s then simply a case of ensuring you’ve sufficient funds to cover the transfers when they’re made.

#3. Pay Your Bills Twice a Month – If possible, it’s worth getting into the habit of paying bills for credit cards, loans and similar outgoings twice a month. A proven method for improving your credit score while taking better control of your debts.

#4. Contact Your Creditors – Should you suspect for a moment that you may be late with even a single payment, contact your creditor as soon as possible. It’s within their power to delay taking the kind of action that could result in further damage to your credit score.

#5. Apply Only When Necessary – The number of applications for credit facilities you submit within any given period of time could affect your credit score. Hence, it’s important to only apply for credit facilities where absolutely necessary.

#6. Don’t Close Your Older Credit Card Accounts – If you want to get rid of one or more credit cards in your collection, focus on the newer accounts you’ve opened. Any you’ve had for some time and kept under control could be boosting your credit score.

#7. Live Within Your Means – It’s an obvious tip, but one that warrants revisiting from time to time. Rather than living in debt and surviving pay cheque to pay cheque, reconsider the financial viability of your lifestyle in accordance with your means.

#8. Address Maxed-Out Balances – If you have any credit cards or overdrafts that are dangerously close to going beyond their specified limits, try to bring down their respective balances as soon as possible.  Maxed-out credit doesn’t do your credit score any favours whatsoever.

#9. Consider Subprime Financial Products – One of the best (and only) ways of building a strong credit score is to demonstrate how responsible you are with appropriate credit facilities. If you’re counted out of the running for standard lines of credit, consider subprime loans, credit cards and so on. Just ensure that you handle them responsibly, or you risk further damaging your credit score.

#10. Consolidate Your Debts – Last but not least, consolidation loans provide the opportunity to combine multiple debts into a single loan at a far more affordable rate of interest. The consolidation loan will usually be recorded on your credit file, but nonetheless provides the perfect starting point to begin rebuilding your credit history.

Should you decide to apply for a subprime credit facility of any kind, you may need to focus your efforts on specialist lenders beyond the usual High Street names.

If in doubt, contact an independent broker to discuss the options available for rebuilding your credit score.

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