Trying to build good credit is a vital indicator of your creditworthiness. Having and keeping a strong credit file is becoming increasingly difficult due to the economic climate which has seen steep increases to the cost of fuel and the cost-of-living through food and energy prices seeing an uptick in cost.
Taking time to review and work on your credit score is a daunting task, but if you have poor credit your access to reasonable lending options diminishes and creates a cycle of debt that is hard to overcome.
In this article we will try to cover some tips to try and help you to improve your creditworthiness.
Tips to Help Rebuild Poor Credit:
- Consider opting for a poor credit credit card – credit cards for poor credit are specifically designed to try and help you build your credit score. They typically have low initial credit limits, with thimbl. for this example, having a starting credit limit of £1,200. This is to encourage small, manageable repayments and to mitigate the risk of overspending. One thing to bear in mind with a credit card for bad credit is that they also have higher than average APR %, so that’s something to be aware of. If you make more than the minimum repayment on a credit card for poor credit within the scheduled repayment dates, then you can improve your credit rating as you are demonstrating to lenders that you can manage your financial affairs. This card option can only help you rebuild your creditworthiness if the rest of your financial outgoings are in order.
- Register to vote – by registering to vote you are demonstrating a fixed address, which is a factor potential creditors consider when carrying out credit checks. You do not need to own the property, this could be your parents’ house. Provided you can have access to the mail from the address, you are able to put this address down as your registered address used to vote. This helps build credit score as it gives lenders confidence of a fixed line of professional communication with you.
- Avoid multiple applications for credit within a short period of time. Every time you make an application for credit the lender will carry out a hard credit check on your profile. Every time a hard credit check has been carried out a hit marker is placed on your file. If you have applied for lots of credit within a short period of time, a future potential lender will see this on your file and will be unlikely to lend to you as it shows that you can’t manage your finances effectively.
- Report any errors on your credit file. You can use recognised Credit Rating Agencies, such as Equifax to carry out a free credit check. If you spot any suspicious activity or inconsistencies on your file, you need to report it or rectify it. A common error is not updating your address or having typos in your personal details on your credit file which is easily rectified and can improve your overall credit health.
- Try to avoid moving house too much. If you regularly move house, it will make it highly unlikely that a lender will offer you a good credit offering because there is a risk that they won’t be able to contact you or have a fixed line of communication.
- Speak to an expert to consolidate your debt. If you currently have debts you can speak to free debt charities and seek advice on how to consolidate your debts into small, manageable repayments. These charities will give you free professional advice and also help you to get an action plan and realistic budget in-place to start repaying your debt in manageable monthly repayments.
These tips are great ways to start trying to make a positive impact on your credit score. If you have debt or financial worries, you may want to speak to your local debt charity as they can provide you with a plan to help you get your finances back on track.
