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What are the best ways to improve your credit rating?

If you have suffered money problems that have resulted in missed payments, arrears, a default, a County Court Judgment or even bankruptcy your credit rating may have suffered. However, it is possible to repair your credit history.

Here, we outline five ways that you can improve your credit rating.

Get a copy of your credit file

The first step to improving your credit rating should be to obtain a copy of your credit file. By getting a copy of your file you can see exactly what appears on the records, and what information potential creditors will be able to see when they underwrite any application you might make.

Sometimes it is worth applying for your information from more than one agency in case their records are slightly different.

You can ordinarily apply for this information online or by post. You will need to provide some information including six years address history and your full name and there is often a small charge to obtain your credit data.

Correct any errors in your credit file

Once you have obtained a copy of your credit file it is important that you correct any inaccurate or out of date information.

For example, a lender may not have updated your address when you moved house or the credit agency may have got you mixed up with someone with a similar name. Contact the credit agency and ask them to correct any incorrect information on your file. Simply doing this may make a significant difference to your credit score.

Add information to your credit file

Adding information to your credit file can also improve your credit rating. If you have moved home and are now on the Electoral Roll, then this can help your credit score. If you’re in stable employment then it may also be worth adding this information to your credit file.

Establish credit in your own name

In some cases, your credit rating can suffer because of your association with someone who has a very poor credit rating. For example, your spouse or partner may have poor credit that reflects badly on you, particularly if you had a joint account with them.

If accounts were not in joint names you should be able to demonstrate to lenders that the problems were not of your making and they are obliged to treat you as an individual.

Opening accounts in your sole name may help you demonstrate that you can manage credit responsibly.

Use credit responsibly

Even if you have experienced financial problems, you may still retain credit or charge cards. To rebuild your credit rating, it can help to use these cards.

If you charge a small amount each month to these cards and pay them off in full your credit file will start to show that you are a responsible card user, and that you have made all your regular payments on time.

You may also want to try and apply for a new credit card. Depending on your personal circumstances you may be approved for a card, although you may well have to pay a higher interest rate because of your previous credit issues. Again, by using the card responsibly and making all your payments on time it demonstrates that you are capable of maintaining a credit agreement.

It is also worth approaching your exiting bank or lender for credit, as they may well treat you more sympathetically as an existing customer.

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