If you need finance for a new property, a car, or something else, you can run into roadblocks if you have a poor credit rating. Poor credit happens for all sorts of reasons, but it can be repaired and built up again with some smart strategies. Use the tips below to build a stronger credit file.
Prove Address
In order to prove your credit worthiness to lenders, it helps to be registered on the electoral roll. When you are on the electoral roll, it shows that you have an established address and take your public duties seriously. However, you are required by law to be registered on the electoral roll.
The electoral roll and your credit file are interlinked, so when you register to vote, the information is recorded in your credit file. If you are not registered at your address for some reason, this can adversely affect your credit file. Don’t forget to prove your address to any future credit lenders.
Credit History
Credit history is one of the key concerns for lenders; the trouble is that some people don’t have a strong credit history while others don’t have one at all. It’s common for young people and people new to the country to not have a reasonable credit history and those with historical debt.
While there is no quick fix to this problem, you can start building a credit profile quickly using a number of strategies. Use a combination of the strategies on this list to start making your credit file more viable to lenders. It’s also a sensible idea to secure a credit card and use it regularly.
Make Payments
One of the best ways to show lenders that you are responsible and viable is to have a history of consistent payments. Of course, credit card payment histories are best because they show lenders that you can manage credit responsibly, but payments of any kind can also be helpful.
If you have adverse credit to start with, you might struggle to get a credit card at all. If this is the case, look at some of the other regular payments you make to your bank account, this could be your rent payment, phone payment, or insurance. Now link the account to your credit report.
Credit Utilisation
Credit utilization refers to the amount of credit you use when you have a credit line. For instance, if you have a credit card with a £2000 limit and you only use £1000 of it every month, this means you have a credit utilization amount of 50%. Lenders look at this when issuing credit.
Keeping your credit utilization score low tells lenders that you understand how to control your credit, and you are less likely to get into financial difficulties. For this reason, it increases your credit rating and makes you a prospect when finding finance with a Car Finance calculator.
Score Boost
If you don’t have credit cards and lines of credit, it can be hard to prove that you are financially responsible, even if you pay all of your subscriptions on time and never miss a rent payment. For that reason, Experian offers a service called Score Boost that takes account of these items.
Visit the Experian website and log in. Now connect your bank account to Experian using a secure connection; Experian will then assess your regular payments, such as your Spotify payments, Netflix payments, and so on. It will adjust your credit score based on these factors.
Credit Mistakes
The integrity of your credit report also matters. Considering any walk of life, when an authority such as an interviewer, bank manager, or business client sees spelling mistakes on official documents, it gives them an adverse impression. These are small details, but they still count.
Check your credit file thoroughly and make any changes to incorrect details. If you have some mistakes on your address, for instance, resolve them right away. Similarly, if there are any mistakes on the addresses the providers hold, contact them and make sure they are updated.
Credit Builder
If you struggle to get a credit card due to historical debt, then consider getting a credit builder credit card. These are typically credit cards with a low spending limit and a high rate of interest. However, their role in your life is not to support your finances but to improve your credit score.
It’s important not to think of a credit-building card as a source of credit; instead, use it for regular payments such as buying fuel at the pumps and paying off the card as soon as possible. If you pay off the card in full every month and keep your credit utilization low, you can build your credit.
