Managing your debts - Improve your Credit Rating

Why is it important to maintain a good credit history?

Having a good credit history means it will be easier for you to obtain credit when you need to. When you apply for credit, the company will check your credit score through a credit reference agency like Experian, Equifax or Call Credit. Your credit score is based on your known credit history and shows how you have repaid credit in the past – it is an indication of how you will repay credit in the future.

If you have a good credit history you are seen as less of a risk to companies who are providing the credit and therefore more likely to be given the credit you might need at good rates. A good credit history means you will have access to a wider range of credit products. A poor credit history will limit your choice, but can be improved over time. 

How might I end up with a poor credit history?

There are a number of things that can lead you to build up a poor credit history; some of these include making late payments or missing payments altogether, applying for too much credit in a short space of time, having a CCJ registered against you and not being on the electoral roll. You might even find that having never taken credit before will go against you.

Every time you make a late payment or if you miss payments altogether, it will show up on your credit report. Too many missed payments and lenders will decide that you're a bad credit risk. As a result when you apply for credit you'll have to pay a higher rate of interest, or you may even be rejected.

What information do credit reference agencies store about me?

Whenever you make any kind of application to borrow money, lenders will want to check your financial history. They will do this with their chosen credit reference agency to see whether you are a good or bad credit risk. There are three main credit reference agencies collecting information on us: Equifax, Experian and Call Credit.

Credit reports include details of the electoral roll, court judgments, bankruptcies, your current and past credit commitments and they also show if you have missed or defaulted on any payments over the last six years. What your credit report says about you affects your ability to borrow money at reasonable interest rates or even to borrow money at all.  Searches cannot go ahead without your agreement.

How can I get a copy of my credit report?

We’ve teamed up with Experian, so click here to obtain your free credit report now.

Alternatively, you can request a copy of your credit record by writing to Experian at:

Experian
PO Box 8000
Nottingham
NG1 5EX

You can also contact Equifax at:

Equifax File Advice Centre
PO Box 3001
Glasgow
G81 2DT

Or contact Call Credit at:

Call Credit Plc
One Park Lane
Leeds
West Yorkshire
LS3 1EP

How can I improve my credit rating?

Firstly, you should get a copy of your Credit Report to establish your current credit record status.  Click here to view your credit report online for free.

The most effective way of improving your credit rating and to start getting out of debt is by paying your bills on time and borrowing within reasonable limits. Your rating could improve even after just six months.

To start managing your finances more effectively, first you need to set sensible and achievable goals. Start by making a note of all your incomings and outgoings. You need to prioritise the essentials like mortgage payments or rent, council tax, utility bills, food shopping and travel to work. Then try to reduce non-essential outgoings and make savings where possible. Finally if you can, consider how you might be able to increase your incomings.

You’ll be pleased to know that being approved for an aqua card and managing your account responsibly – paying on time each month and staying within your agreed credit limit – may help you improve your credit rating over time.

Most of all, don’t try to deal with this alone. There are many sources of help and advice, and the best place to start is your nearest Citizens Advice Bureau, or contact the National Debtline at http://www.nationaldebtline.co.uk/. Alternatively, another website that provides useful information is Credit Card Answers.