Check & repair your credit rating in 30 days

credit rating

HOUSEHOLDS with poor credit pay out an extra £1,170 a year, by some estimates.

Better credit can help you get a mortgage, a loan, even a mobile phone or a lower interest rate.

We don't have 'number' credit ratings in the UK: each lender weighs the product you want - and, increasingly, even products you have - against the information they happen to have in order to reach a decision.

That makes knowing how far a rating has improved complicated.

Luckily, though, the actual improving part is pretty simple. Here's our plan to do just that in 30 days: it's like the Special K diet for your finances.

Days 1-7

Order your credit report(s) | Get on the electoral roll

Let's start small in week one. One of the easiest things you can do to repair your credit rating is to get on to the electoral roll.

When you're registered to vote it gives lenders a really simple way to see that your name and address check out, it doesn't take long and it's free.

Each local authority has a different procedure for registering, go to Direct Gov's electoral roll site to find out how to enter your details.

Not sure if you're registered? Your local authority will be able to tell you and About My Vote can help you find the right person to ask.

Note that it'll also help to improve your credit rating if you're consistent in applications (see week 4 for more on this) so if you write your address in a few different ways try to stick to the format listed on the electoral roll in future.

Next, it's credit report ordering time.

Not the non-existent 'credit rating black list' but just the information held on you by major reference agencies that lenders might refer to.

Many reference agencies make these reports available for free online (see here for more details) with a 30 day trial of their service. After 30 days you'll have to make a regular payment to keep tabs on your report and if you just want the trial you'll need to cancel before the 30 days are up. More on how this works in our full review.

If that sounds a bit stressful, it does to us, you'll be better off ordering a statutory credit report which costs £2. You can order from the 3 major agencies - Equifax, Experian and CallCredit - and the full details are in that free report article linked to above.

You can see these reports online but you can also choose receive them by post so we'll return to this in week 3.

Days 8-14

Automate your finances | Ditch unused lines of credit

In the long term, using the financial products that you have consistently and responsibly will help to improve your credit rating.

That's why it's a good idea to automate as many of your payments as you can to avoid obvious 'black marks' like missed credit card payments. The aim is to make your finances a well-oiled machine that pretty much runs by itself while you do something more fun with your time.

So: got a credit card? Set up a direct debit to meet the minimum repayment or, even better, more than the minimum.

Dip into an unplanned overdraft now and then or think you might? Request an overdraft to give yourself a buffer or, if you're getting a bad deal, switch current accounts altogether.

Another bit of future-proofing to repair your credit rating is getting rid of credit products that you're not using.

We have a full guide to these and other time and money saving measures here.

Having a rarely touched bank account won't hurt but holding a lot of credit cards, even if you never or rarely use them, makes you more risky because it means you could easily borrow big.

To cancel cards call the provider, it's not enough to just cut them up Bridget Jones-style.

Days 15-22

Review your credit reports | Debt busting

By now you should have at least one credit report and that means you'll be able to see, more specifically, how to repair your credit rating.

Go through with a fine tooth comb: you're looking for inaccuracies in personal details like the wrong date you left an address or, worse, the wrong address and inaccuracies in your finances like a wrongly listed missed repayment.

It's worth saying however that research from Equifax released in June 2011, revealed that just 4% of their customers actually ever queried a credit report, and just 0.01% applied for it to be corrected.

In other words, there is a perhaps a line of usefulness in fixing minor details.

Make sure you also look for the underused lines of credit we talked about last week and any financial links that may harm you.

Note that it's only when you have a mortgage or a joint bank account with someone else that lenders regard you as 'financially linked'.

Simply living in the same house as someone with a poor credit rating won't hurt you even if you're married or in a civil partnership.

If you find an inaccuracy write to the credit reference agency and inform them of the mistake, they can update it or wipe some things, like a default on a debt, altogether. More on this here.

If it's a problem with a debt that's still open you can also talk to the lender.

As a last resort, an explanation of a complex problem can be recorded on your report (known as a 'note of correction') and can help your credit rating by straightening out an unusual blip.

You can't hide or erase defaults, County Court Judgements (CCJs) and bankruptcies but they will be wiped after six years.

Finally, and importantly, your credit report lists any outstanding debts you have.

If the potential for debt (those old credit cards) makes lenders jumpy imagine what the real thing does. That's not to say that borrowers have bad credit ratings but the best minimise debt as much as possible.

It's also a good idea to pay off debts full stop.

Find more information on dealing with all kinds of debt in this full guide.

Credit card debt can be particularly pernicious. Deals offering introductory rates on existing debts moved to the card could be useful in that case - compare deals here and find out more about dealing with multiple card debts here.

Days 23-30

Keep those good habits | Consider 'credit building' cards

Last week and time to look to the future.

The best way to truly repair your credit rating is to not damage it in the future. That means staying stable and consistent (we know, we know, boring) as much as possible.

You've already gone part of the way on this in week two by automating as many of your payments as you can, now it's time to get into a few more good habits.

Do your research before applying for a new credit card or loan - now that you know where you stand with your credit rating that should be a lot easier - and choose the best time to make a new application, a time when you haven't just made a big change like a new address or a new job.

Research and timing mean you're far less likely to get a rejection.

Rejection hurts on its own but it's also best avoided because lenders can see if there's been a recent search on your report and that hurts your score. That won't matter to you if you get the deal you want but it will if you're forced to apply again elsewhere.

To avoid knock backs from searches make sure you space out applications for any products that require a search on your credit report by at least 3 months to give yourself the best possible chance of success - even if the products you're applying for seem completely unrelated to each other.

Find out more about this here.

Remember, getting a new insurance policy or moving to a new mobile phone or broadband contract can mean a search on your file.

Finally, consider products aimed to help rebuild or improve a credit rating.

Poor score credit cards (see the table) can help to improve and strengthen a damaged credit history, as well as help to build a new history as well, or if you're not ready to make a credit card application, the Cashplus prepaid card offers another way to add positive marks to your credit file, read more on this here.

Comments

1
1 August 2014
dan

Hi, I am trying to get a mortgage and have been declined. I've checked my credit report and everything is green, except the electoral roll, which is orange.
Myself and my joint applicant are both registered at our current address, but have been for less than one year.
How long until I can expect to be accepted, and the box turns green?

Thanks.

11 November 2014
Eva

Hi,

According to Equifax, 3 years!

Cheers

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