It is really easy to ruin a credit rating. All you have to do is spend lots of money you don’t have, rack up a shed load of debt, and then don’t bother paying it back. Before you know it, creditors will be hunting you down and your name will be blacklisted everywhere.
Unfortunately, this is exactly what happens to a lot of people, often through no fault of their own: they lose their job, fall on hard times, and because debts don’t just magically disappear overnight, the situation soon gets out of control. If this has happened to you or your credit rating has been shot to pieces for other reasons, don’t panic because there are lots of ways to boost a credit score.
Check Your Credit Report
Try and get into the habit of checking your credit report at least once a year. Mistakes happen and if there is a mistake on your credit file, it will adversely affect your credit rating and you might not realise until you apply for a loan and are rejected. To prevent this from happening to you, go through your report regularly and challenge anything you don’t agree with.
Get Added to Someone Else’s Account
Clearly it will be difficult to persuade a friend or relative to add you as an authorised user to their credit card account if you have a history of proliferate spending, but if your only problem is that you are young and therefore an unknown quantity, credit-wise, then this is a useful way of establishing a good credit rating. The same applies if you have been out of the country for a long time and have no recent credit footprint.
Apply for a Credit Rebuild Card
Anyone with a dodgy credit history should try applying for a credit rebuild card. Interest rates on these products are considerably higher because you are viewed as a much higher risk. But if you are able to get one and manage it responsibly, it will help you to rebuild a bad credit rating.
Apply for a Mobile Phone Contract
An easy way for young people to boost their credit rating is to apply for a contract mobile phone. Once you have had a mobile contract for a year and made the monthly repayments without incident, it will boost your credit rating and make it more likely lenders will consider you for UK home and personal loans.
Cancel Unused Credit Cards
Do you have a slew of unused credit cards in your wallet? If so cancel them as it could damage your credit rating. Lenders look at how much credit you have available when you apply for loans or new credit cards. If the figure is high, it might damage your credit application. However, don’t cancel all your cards as this could leave you with nothing to fall back on.
It takes time and effort to boost a credit score, so the best advice we can offer is don’t do anything to damage your credit rating in the first place.
Kidal Delonix is a contributor to Mr. Hoffman's blog. The views and opinions are entirely his/her own and may not reflect Mr Hoffman's views.
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