Six ways to improve your credit rating

As part of government plans to crackdown on the unfair treatment of consumers by credit card providers, everyone will soon have access to their credit rating online, for a maximum fee of £2.

Meanwhile, victims of ID fraud and people receiving debt advice will be able to check their credit report for free.

If you have never checked your credit rating, it is a sensible idea to do so as soon as possible.

Since the credit crunch financial institutions have become nervous about who they will lend to. In fact in this day and age to have a chance of being accepted for any form of credit, let alone a market leading deal, you must have a virtually spotless credit history.

It is therefore vital you regularly check your credit rating and make sure there are no inaccuracies on your file.

This could prevent you from being rejected for credit in the future, and damaging your credit rating. What’s more, by doing a little research into what exactly does and does not affect your score you should be able to improve your own rating.

Get on the electoral role

Financial companies like to be able to track your whereabouts, and the easiest way to make yourself visible is by making sure you are on the electoral role. Worryingly, according to recent research by Kensington more than four million people do not even know if they are on their local electoral register.

Show evidence of stability

Staying loyal to the same bank and employer for a decent amount of time, and not packing up house every year will help show lenders you are stable. Meanwhile, entering a landline number instead of your mobile number on the application form should help with security checks.

Cancel unused cards

If a lender sees on your credit file that you already have access to lots of credit, they may consider you a high risk customer, even if you never use the credit cards that are listed in your file. Therefore, make sure you cancel any accounts you no longer use.  

Build up a credit history

Lenders predict how reliable you will be as customer based on how you have dealt with credit in the past. However, if you have never borrowed before, this can quickly turn into a catch 22 situation. A credit building credit card could help you start to build up a credit profile, although be aware they usually come with very high interest rates. 

Don’t apply for too much credit

Each time you apply for credit you leave a credit footprint on your file. If you leave too many lenders may think you are financially unstable and be reluctant to accept your application. Therefore make sure you space out your credit requests carefully over a decent period of time.

Be a responsible borrower

Missing or making late payments, exceeding your credit limit and generally managing your accounts badly can severely damage your credit rating. Make sure you budget carefully and set up direct debits to make payments if you suspect you won’t remember when your bills are due.