Top 5 Tips For Rebuilding Your Credit Rating

• Amanda Gillam
• 14th November, 2014
• Credit History & Credit Future

We often hear the comparison that taking steps to repair your credit rating is like going on a fitness push. Although it takes some time, if you work hard and stick to it, you can achieve your goals. Ideally speaking, the most effective way to manage a credit rating is to ensure that it does not become too poor in the first place. Obviously, this is not always possible and if you need to take steps to get things moving in the right direction, try the 5 tips that we have highlighted below.

Tip 1: Check Your Credit Report

The first step towards repairing a poor credit rating always begins with a thorough check of your credit report. Although it may cost a few pounds, it is not too expensive and a visit to one of the credit checking agencies such as Experian should be your first port of call. Your credit report contains all of the information which is factored in to calculate your score and although unlikely, it is possible that it may contain errors. It is of particular importance that you check to make sure that there are no late payments incorrectly listed for any of your accounts. If you find anything which you believe to be incorrect, make sure that you follow it up.

Tip 2: Set-Up Payment Reminders

One of the biggest contributing factors towards a declining credit rating is missing or falling behind on your payments. Taking steps to ensure that you remember to make payments on time is a considerable step in the right direction. Setting up direct debits and standing orders can certainly help and there are even some agencies now who will text or e-mail reminders when payments are due.

Tip 3: Reduce Your Outstanding Debt

Obviously, we understand that this is often far easier said than done but the total outstanding debt of an individual is a hugely significant factor for any credit rating. Cutting up credit cards and ensuring that the outstanding balance only moves in one direction is a great first step. Using your credit report to make a complete list of all of your accounts and then go online or check recent statements to determine how much you owe on each account and what interest rate they are charging you. Determine the most effective payment plan which gets the most out of your available budget for debt payments towards the highest interest cards first, while maintaining minimum payments on your other accounts.

Tip 4: Don’t Apply Unnecessary Credit

Few people realise that regardless of its success, each application that you submit for new credit leaves an imprint on your credit rating. Therefore applying for several credit cards all at once will have a very negative effect on your rating and is something that should be avoided at all cost.

Tip 5: Consider Debt Consolidation

Debt consolidation is the practice of bringing all outstanding debt into one place. Repaying a single debt each month, even if it is much larger, is often much easier than trying to repay several debts at the same time. Even if your credit rating will mean that you cannot apply for a loan with your bank, specific bad credit loans such as guarantor loans can offer the perfect debt consolidation solution. As well as making the debt easier to manage, using a guarantor loan can even help to reduce the overall debt because you will only have one amount of debit interest to face as opposed to several.

Video: Improving Your Credit Rating

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