Having a bad credit score can stop you spending your money as freely. Credit checks are becoming more common these days – mortgage lenders, landlords, car lease companies and even phone contract providers may reject you as a customer if you have a bad score. Here’s what you can do to overcome a bad credit rating and take control of your finances again.
Make sure you have a credit history
If you’ve never borrowed money before or taken out a monthly contract that requires you to make regular payments, it’s possible you may not have a credit score. For most lenders and creditors this won’t be too much of a concern, but the likes of mortgage dealers and car leasers may reject you if you can’t give them any proof of whether you’re a good spender. In these situations, try taking out some form of smaller contract to prove that you can pay installments on time.
Taking out more loans could damage your credit score further, especially if you then fail to pay these back on time. In fact, most lenders may refuse to even give you a loan and this rejection itself could damage your credit score. Fortunately, when disaster strikes and you need to borrow money, there are payday loans out there that will give you a fairer assessment before taking you on. There are also consolidation loans that can help you to manage your debts better by converting them into one single debt, as well as credit builder loans (which the next section will explain in more detail).
Make use of credit-builder schemes
Your bank may offer a scheme to rebuild your credit score. This could include a credit-builder loan or a credit-builder card. Showing your bank that you can make each of your repayments on time could cause them to then wipe your bad credit history and put in a good word to future creditors.
Cancel unused cards
It’s possible that unused credit cards could be having an effect on your score – by having access to extra debt, you could be considered a risk by some creditors. Consider cancelling any cards that you no longer use.
Get on the electoral register
Many credit checks will use the electoral register to check your personal details against those on your accounts. If you’re not on the electoral register, companies may not be able to carry out a full credit check, which could be causing you to be rejected. Signing up to the electoral register gives you the option to vote, but doesn’t mean that you have to vote – even if it’s just to save your credit score, everyone can benefit from getting on the register.
Check your personal financial details match up
Any discrepancies in your personal details could result in red flags when taking a credit check – for example, having a different address on two accounts could be seen as a sign of fraud. Previous first names and maiden names could also cause trouble when doing a credit check, so make sure that these details all match up. Your bank will be able to help you make these changes.