Improving your credit rating

We all know that in order to borrow we need to have a good credit score. What about if you’ve never had any credit at all? You’re fresh out of college or you’ve moved country. Perhaps you have a CCJ against your name and no one wants to touch you. How can you build or rebuild your credit? The things I mention aren’t for those who want credit for the sake of credit. It’s for those who need credit who might want to get a mortgage in the future to for a house or invest in a business. Building credit takes time and unless someone is prepared to take a chance on you it’s a hard place to begin.

Simple things you can do first

If you are not already registered, register your information on the electoral roll. Creditors look for your information on here. It is also proof of where you live and for how long. Creditors tend to favour people who have lived in one place at least three years.

Have at least one utility bill in your name

If you live with someone else but you are equally responsible for the bills, have at least one utility bill in your name. Your council tax for example, this also shows that you live at this place. Gas and electric bills are also good.

Don’t keep applying for credit

If you’ve been rejected once or twice don’t apply again immediately. This doesn’t look good on your credit scoring record. Creditors will simply follow the same procedure of rejecting your application. If your application for something was rejected, wait at least another three months before trying again.

Get your credit report from Experian

This will have your up to date details of your credit report. It will show what your score is and how you grade. Having this visual of how you are doing financially can give you an idea on how you need to improve. Also getting your credit report from Experian will help you monitor identity fraud. It helps stop identity fraud and you have an idea if anything suspicious is going on in your name.

I’m not a fan of credit cards but they help build credit. If you are disciplined and can pay the card in full at the end of the month then these credit cards might be able to work for you.

I would suggest this one first because it has a lower APR at 34.9%. This is high but if you can pay it back in full you are unlikely to get interest charges. It is for those who want to build credit and want to manage a low balance. Its credit limit begins from as little as £200.

You can apply for this card if you

• You're over 18
• You have some history of managing
  your credit even if you have had CCJs
  or defaults in the past
• You are on the electoral roll

The next card I would recommend if you are disciplined and are able to pay back the balance in full would be Vanquis card. Please take note that these cards are not for uncontrolled spending or for things you don’t need. They are only there to help build your credit and these creditors give the chance to do just that. I’ve read on many forums how many people have got into trouble with these credit cards and get upset that they can’t pay them back and the interest is too high. If you can’t afford to pay back a credit card don’t get one, simple as. These are only to help build credit.

You must be over eighteen, with this card you can apply for it if you have bad credit or have no credit at all. They will start you on a small manageable amount of £150. APR is 39.9% Variable. Again, if you can’t pay the full balance its best not to get yourself this card.

When it comes to credit, self control is key. If you really want to build your credit then you can do this and in future you can move to cards with lower interest. When you build credit it is for the important purchases like your house. Hopefully you will find this helpful.