In this post we will take a look at some of the steps you can take to start to rebuild your credit score if you are in the UK. You may have recently been in debt and are looking to get the credit aspect of your life sorted.
It’s not easy getting your credit score or rating to use a better definition. It is also important to remember that different lenders view information differently dependent upon their own internal policies.
Step 1 – Obtain a Copy of your Credit Report
The reason you need this Credit Report is so you can see the information that has been recorded about you. It is hard to deal with something when you don’t know what you are up against.
Step 2 – Check your Credit Report.
Essentially you should check that the information that has been recorded is in fact correct. If it isn’t you can get it put right. The amount of times I have found incorrect information on my credit report is surprising so it is definitely worth checking it.
Step 3 – Pay off your existing Debt
If you have existing debt that is still owed, make an effort to repay it. This is especially true if you fell behind with payments or worse, you got a default. Paying back your debts shows potential lenders that you are making progress with your finances.
Step 4 – You need to give it time
Time is a great healer and this is especially true when it comes to your credit score. As time passes by the significance of information reduces. After time information is also not reported on your file.
Step 5 – Take care when applying for credit
If your credit score is currently poor then applying for a mainstream credit card is a waste of time, plus a credit search would be recorded. You are better applying with a specialist lender such as Aqua Card, Capital One or Vanquis for example. Watch out though as these providers do charge a high rate of interest. These are credit cards designed to be used and paid back in full quickly and are not suitable for long term borrowing.
Step 6 – Learn from your Mistakes
Hands up I still haven’t learned however it is really important that we try to learn from our past mistakes to avoid falling back into the same trap of debt. Watch how you are using credit and makes sure you don’t owe too much.
Step 7 – Avoid a Credit Binge
As your credit rating begins to improve, so does your chances of getting accepted for credit. I fell into this same trap last time hence my new debt problem. If you feel like you are slipping down the slope again stop and assess and remember what it is like to be in debt. If you are using credit to buy things you don’t really need then you should also consider whether it is actually worth continuing on down this path.
Step 8 – Don’t stick it on Credit
Avoid Buy Now Pay later as it is usually more like buy now cry later. Live within your means and save up for things. Yes it is boring but it is better than getting back into debt.
Step 9 – Become a Saver
If you can get into the habit of saving then that is great. Saving up for things is more rewarding plus you will build a nice little safety net for the unexpected. It’s all about changing attitude to money and appreciating its value.
Step 10 – Look after your Credit Rating
As you are now trying to rebuild your damaged credit rating it is important to look after the accounts you still have including any new ones. Managing your accounts responsibly will go a long way towards helping improve your overall credit score.
You will find that as time passes by your credit rating will start to improve. However I cannot stress enough that the most important aspect of all this is the time element.
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