Longer term actions
Some things help over the longer term or in an ongoing way, such as:
- Don’t miss payments. It sounds simple but sometimes we just forget to make payments on time. Even a couple of missed payments can have a negative effect on your credit rating.
Setting up direct debits will help automate repayments each month.
- Be careful who you link up with. Be careful when taking out joint financial products. If you’re financially linked to someone it means that that persons rating could affect yours too.
If that person has a poor history, it could be beneficial to separate your finances. This applies to joint mortgages, loans and bank accounts.
In the same vein, if you split up with someone you were previously linked with, it’s important to check your credit reports to make sure they have also severed those ties.
- Only apply for what you need. Avoid applying for too many things, particularly in a short space of time. You could give the impression that you’re desperately in need of credit, which could lead to rejections when you actually really need the credit.
- Never ignore a rejection. If you’re turned down for credit, don’t just ignore it. Though you’ve no legal right to be told why, it is always worth asking the question of the lender to see if they will give you more information.
If they can’t, check your credit rating before reapplying.
- Build good history. There isn’t a quick fix to engineer an immediate uplift in your credit rating. It will take time to build a decent credit history. Having a credit card that you use, and repay each month will make quite a difference after about a year.
Obviously, if you’ve a poor history obtaining a card in the first place might be tough, but these days there are credit cards designed specifically to help people build or repair credit histories . They’ll potentially come with very high rates of interest, so you’ll need to be really disciplined. Pay the card off in full and on time every month and you’ll pay no interest whilst helping your credit rating move in the right direction.