Cleaning up your credit file doesn’t have to be too difficult. You may want to do this for a variety of reasons, from applying for a new job, to wanting to get accepted for payday loans from a direct lender. Whatever the reason may be, following these simple steps will enable you to clean up your record and begin a new journey that represents not your past, but your current affordability.
Although this is not a quick fix solution and will not happen overnight, following these steps will help you clean up your credit file, enabling you with many more financial opportunities:
- Correct any mistakes on your credit report so it truly represents your current financial situation.
- Close any accounts you no longer need. Many financial companies will pay attention to the total amount of credit available to you. Even though you aren’t using them, those credit cards sitting in your draw could well be lowering your score.
- Sign on to the electoral roll. Not being on the electoral roll can count against you and lower your credit rating. By ringing up your local council you can get yourself put on it. It’s as simple as that!
- If you think you might have a low credit score, but you want to know how much a company would charge for a loan, ask them to do a ‘quotation search’ not a ‘credit search’. This means they will give you an idea of the interest rate they would charge but they won’t do a full credit check. Every time a company does a credit check on you, your credit score will lower, so the less, the better.
- The final, and main way to improve a credit record, is by borrowing money and paying it back on time. This may seem counterproductive, but trust us, those who pay back their credit will have a much higher credit score, compared to those who don’t borrow at all.
Responsible borrowing will allow you to rebuild credit. The key rule to follow is to use no more than 15% of your available borrowed credit, ideally between 5%-10%. For example, if your borrowed credit limit is £1000, ideally spend between £50-£100 a month on your card, before paying it back in full at the end of the designated time frame.
Credit scores are based on how you use the credit available to you. If you use the full amount each month, you will be deemed as an irresponsible lender, and the same goes by only paying minimal amounts. Avoid harming your score, prove you’re a responsible borrower, and watch your credit file clean up with an improved credit rating.
There are many lenders and brokers available who will deal with individuals with poor credit, so you don’t need to worry as there are lending options available. But at the end of the day, the cleaner your credit file, the easier life will become on the whole.