This is a collaborative post.
A poor credit score doesn’t have to stay with you forever. If you find that you’re being held back by your credit score, here are a few ways in which you can improve it .
Start paying off your debt
A large amount of debt can suggest that you’re unable to live within your means and is likely to damage your credit score. This damage is likely to be even greater if you owe multiple lenders large amounts.
By taking steps to pay off this debt, you may be able to rebuild your score. Try to erase debts one by one, starting with the smallest ones. Alternatively, you could pay off all your debts with a consolidation loan – there are poor credit debt consolidation loans that you can apply for with a low score. Having a large single debt may look better on your record than having multiple debts and it is likely to be easier to pay off.
Pay your bills on time
Every time you miss a bill payment, your credit score is negatively affected. In fact, this is one of the biggest causes of a poor credit score.
In order to pay your bills on time, you need to make sure that you’ve always got enough money in your account. This requires budgeting and keeping track of when payments are due. If your bills are too high for you to keep on top of, consider whether you can negotiate with creditors or shop around for new deals.
Get on the electoral register
Some credit report agencies use your electoral register details to access information about you. If you’re not on the electoral register, credit report agencies may not be able to access this information (which could result in you being rejected when you have a credit check).
Signing up to the electoral roll takes only a couple minutes. Being on the register doesn’t mean that you have to vote – there’s no reason not to be on it.
Consider your credit utilisation rate
Your credit utilisation rate is important to consider if you use a credit card as it can have a major impact on your credit score. It refers to how much of your credit limit you’re using each month.
Ideally you want to use no more than 30% of your credit limit each month – which means keeping credit card balances as low as possible. This should help to rebuild your credit score by showing that you’re not reliant on huge amounts of borrowing. At the same time, you don’t want to not use your card at all as this may also negatively impact your credit score.
Consider a credit builder loan
Credit builder loans are offered by some banks as a way of rebuilding credit. They’re small loans which usually take a year to pay off – if you make each payment, the bank will notify credit report agencies and you should see a boost in your credit score. Of course, if you miss any payments, your credit score will stay low.