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How to improve your credit rating

Posted 16 February 2012

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Your credit rating can have a real impact on your ability to access further credit. How can you improve it? Some ideas...

How to improve your credit rating

When you apply for a loan or other type of credit, the lender will often assess your creditworthiness by referring to the information held by the credit reference agencies. This shows your credit history and helps your lenders decide how 'safe a bet' you are, based on your credit score. The worse your score, the more of a risk you'll seem to a lender.

How does a poor credit rating affect me?

That depends how bad your score is. You may still be able to get some credit but it could be at a much higher rate of interest than that offered to applicants with a good score. The worse your credit rating, the less chance you have of obtaining credit.

What could affect my credit score?

If you've missed payments on credit cards, personal loans and other debts in the past, this might have affected your credit rating. Then, if you go on to apply for more credit and get turned down, this can also leave a negative mark on your file - and the more credit you're turned down for, the worse this will become. Finally, if you have more serious problems that have led to CCJs (County Court Judgments), these too will be lodged on your credit report, making it difficult, if not impossible, to get further credit.

How does bankruptcy affect my credit rating?

You will be unable to obtain credit during the period of your bankruptcy (normally one year) - and it could still be difficult even once you've been discharged. However, bankruptcy is also an opportunity to 'wipe the slate clean' and although it takes time to repair your credit rating, getting bankruptcy advice can help you to make a full recovery.

How do I find out my score?

You can get information on your financial history by contacting the credit reference agencies: Equifax, Experian and Callcredit supply lenders with information when they're looking at an application for credit and these agencies will also give you access to your credit record (you may well have to pay for this). Check that all the information is correct and up to date and, if it requires amending, you can contact the credit reference agency with evidence demonstrating the mistake.

How do I improve my score?

Although each lender has their own approval criteria, there are certain things that influence your overall creditworthiness. Lenders like to see continuity and responsibility, so the longer you live at the same address or stick with the same bank account provider, the better. In general, people are likely to be approved for credit if they have a long-term employment record, own their own home and have a history of paying off borrowing without missed or late payments.


•  Check you are registered on the electoral roll at your current address.
•  Make sure your credit file is correct and up to date
•  If you've been turned down for credit, don't just keep applying to other lenders as this will leave a footprint each time.
•  However, having some credit that you're successfully paying down already can help you get access to credit - as it shows you're managing your debts.

by Sarah Symons

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To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.