Best ways to combat a bad credit score
Your credit score is a three-digit number, typically between 300 to 850, which is based on the information in your credit report. It is used by lenders and providers of financial products who need to understand how likely you are to repay the money you borrow. However, if you have a low or poor credit score, you may find it difficult to secure most types of credit. In this post, we will detail some of the best ways to combat a bad credit score, so you can improve your chances of successfully applying for credit.
- Pay off your existing debts
If you default on a loan or struggle to pay off credit cards, this will impact your credit score. It is a good idea to try and pay off your existing debts to close your credit accounts, and show future lenders that you are capable of making repayments. You can try to use savings, personal borrowing or credit unions to help, but if you have exhausted all other options, you could seek a bad credit debt consolidation loan. This type of loan merges your debts into a single monthly repayment, which could make managing your debts a lot easier.
- Pay your bills on time
As with your credit repayments, your other payment history is also a large contributor to your credit score. Because of this, you should aim to repay your bills on or before the pre-agreed date with your supplier. If the option for a direct debit is available, you should consider setting this up, as it removes the need to remember to pay, and can even result in better deals. You should also be upfront with suppliers about your ability to pay, as they may offer alternative payment plans that could lower the amount you pay each month.
- Make sure you are registered on the electoral roll
The main way that you are identified on your credit history is via the electoral roll. If your name is not on your local register, you may find it much harder to secure forms of credit. You can easily register on the electoral roll via the gov.uk website online or by post.
- Check for mistakes on your file
You are able to check your credit score for free online by using Experian, TransUnion or Equifax. With each of these agencies, you should also be provided with suggestions for improvements, such as updating addresses or starting to use a credit card. This can be such a handy way to find out where your credit score is lacking, and the steps that you need to take to correct it.
- Keep your credit utilisation low
Your credit utilisation is how much of your available credit limit you use, and you should aim to keep this as low as possible. For example, if you have a credit limit of £1,000 and you have used £500, that means your credit utilisation is 50%. If possible, you should aim to keep your credit utilisation at 25% or lower to show that you can manage your finances well.
If you need any more help, please seek impartial support from the Money Advice Service.
