Is your credit score holding you back? Here’s how to fix it

Your credit record could be the silent culprit behind your struggles to secure a loan, credit card, mortgage, or even a basic bank account.

If you’ve been repeatedly turned down for mobile phone contracts or any form of borrowing, it may be time to address your credit report.

Discover how to determine whether your rejections are due to a tarnished credit history—and, more importantly, how to set it right. Find out more about how to clean up your credit score here.

Jasmine Birtles looks at building your credit score

JASMINE BIRTLES

What You Can Do to Improve Your Credit Record

If your credit report shows negative marks, don’t despair—there are steps you can take to address them:

· Contact the Company Directly: If you spot a bad mark from a specific company, reach out to them to discuss the issue. Present your case and ask for the fault to be removed from your record.

· Escalate to the Financial Ombudsman: If the company isn’t responsive and you have a strong case, you can lodge a complaint with the Financial Ombudsman. This independent body resolves disputes in the financial sector.

· Add a Notice of Correction: You can append a 200-word statement to your credit record to provide context for any negative entries. For instance, if you missed payments due to illness, your explanation could help a lender understand the circumstances and reconsider their decision.

Rebuilding Your Credit Score: A Step-by-Step Guide

Improving your credit score is a gradual process. It can take at least six months—and often up to a year—for noticeable improvements. If you’ve experienced major financial setbacks like defaults, CCJs, or bankruptcy, it might take years to fully recover. The key is to start today.

1. Correct Mistakes on Your Credit Report

Begin by fixing any errors on your credit report. Mistakes can unfairly drag down your score, so ensure your report is accurate.

2. Get on the Electoral Roll

Not being registered to vote can harm your credit rating. Contact your local council to get on the electoral roll—it’s a quick and easy way to improve your creditworthiness.

3. Request a ‘Quotation Search’

If you want to check loan options without impacting your credit score, ask for a quotation search rather than a full credit search. A quotation search provides an estimate of loan terms without leaving a record on your file. Multiple credit checks, especially if they result in rejections, can hurt your score.

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4. Make Your Rent Boost Your Score

While mortgage repayments can boost a score, until recently there was no way to use your rent to do the same. But as it’s often a person’s biggest regular monthly expense, it makes sense to use your rent to improve your score! There are some apps, like Emma, which help you do this. The Emma Rent Reporting feature lets you report your monthly rent payments to credit reference agencies. This shows lenders you are responsible and reliable with large regular payments and can help boost your score.

5. Borrow and Repay Responsibly

The most effective way to rebuild your credit is by demonstrating that you can borrow money and repay it on time, every month. Lenders want proof that you’re a reliable borrower.

But what if no one will lend to you?

Use High-Interest Credit Cards Strategically

There are credit cards designed specifically for people with poor credit scores, often with very high APRs (Annual Percentage Rates). These ‘rebuilder cards’ can be an effective tool for improving your creditworthiness, but they come with very high interest rates. Here’s how to use them to your advantage:

1. Use the card sparingly: Charge a small, manageable amount each month.

2. Repay in full during the interest-free period: Avoid paying any interest by clearing the balance before the high APR kicks in.

By following this approach, you demonstrate responsible borrowing without falling into debt. Over time, this will help improve your credit score.

Monitor Your Credit Score for Free

You need to keep checking your credit score regularly to stay on top of any changes. Keeping an eye on your credit score has never been easier. Services like CreditKarma, Experian, and ClearScore offer free tools to help you stay informed about your financial health.

By signing up, you can:

· Receive alerts whenever there are changes to your score.

· Access monthly or weekly updates on your credit report.

While premium features are available for a fee, the free versions typically provide everything you need to monitor your credit rating and stay on top of your finances.