If you are suffering from problems with adverse credit that are stopping you from getting a mortgage, loan, mobile phone contract or any other kind of financial product there are ways you can go about improving your situation.
A person’s credit rating is one of the main pieces of criteria that companies use when assessing the eligibility of an applicant for their services. People with poor credit are generally considered to be high risk which means a company might refuse them services through fear of not being paid.
There are many services that are offered depending on a credit score. These include:
- Utility bills
- Credit Cards
- Mobile phone and landline contracts
- Satellite television
- Bank accounts
So how do you improve your credit score?
This will depend upon your circumstances. Obviously someone who is in a stable financial position is going to find it a lot easier to improve their credit score than someone that is struggling.
Many people find themselves in a vicious circle where the money they earn isn’t enough to cover their credit charges so they miss payments which makes their credit score even worse. If you fall into this category then you might want to consider speaking to a debt management company, apply for an IVA or even consider bankruptcy.
Obviously these are drastic options. Most credit companies are willing to negotiate repayments rather than losing their money altogether so it would make sense to speak to each individual creditor separately and come to some sort of arrangement.
Many people commit themselves to credit agreements and services that they don’t need. If you can’t afford a new sofa, don’t take out credit to buy one. If you already have Freeview digital television and are short on cash, don’t over burden yourself with having to pay for Sky TV.
If you are in a position where you are able to cover your monthly payments but have a poor track record there are a number of steps you can take to get your rating back on track. Be warned this won’t happen overnight.
The first and most obvious thing to do to build your credit score is to make payments on any outstanding debt and make sure you pay your utility bills. Late payments on such things as water bills will likely show up on your credit report so be careful not to fall behind with these.
Once you have your finances under control, you are now going to want to prove to creditors that you are responsible enough to make repayments. To do this you will need to take out credit and services and pay promptly each month. The problem is that many people with poor credit ratings aren’t eligible for many such services.
There are a number of credit providers out there that specialise in dealing with people with bad credit records. For example, the company Vantage offers credit cards to people from most financial backgrounds. If you take out a card with a company like this, ask for a minimal limit and spend a very small amount on it. Each month pay off the balance in full and again make very small payments. You will find your credit report will show a 0 every month that you do so which means you paid your balance off on time. The more zeros your report shows, the better your rating will get.