Improve your credit score
For individuals who have been refused credit due to a low
credit score
there are steps which can be taken to try and improve their credit
rating.
The first, and simplest, is to check the credit files held by the credit reference agencies. Between them, Experian and Equifax carry out most of the credit reference searches in the UK. There is a simple procedure for asking for your details
and this is well worth doing, as mistakes do occur.
Assuming there are no mistakes on your credit file, the next step is to check that your other records are up to date. Some lenders are reluctant to grant credit to someone who is not on the electoral roll. The government recently changed the rules to allow rolling registration, so there is no need to wait to receive an electoral registration form.
Simple steps such as putting the phone line in the applicant's name and checking that all credit card companies and other lenders have your correct address can help. Beyond this, however, it becomes rather harder to improve your credit score.
Rebuild credit history
There are some well established companies that offer credit cards to people with a low credit
score and offer these individuals the opportunity to rebuild their
credit history.
Capital One Bank offers a special credit card for people with past problems. Established and reputable lenders will charge more
interest to credit impaired customers than to people with a good history, but they will not charge the
extortionate rates offered by some less well known companies.
However if you pay the monthly payments on time, this will help you
rebuild or strengthen your credit rating and in time you'll be able to
revert to a credit card with a more competitive rate of interest.
Avoid credit repair companies
There is one group of companies, however, that all the experts say are best avoided. These are the so-called credit repair companies. These companies promise to fix problems with clients' credit histories, and they charge for doing so.
According to the credit reference agencies, these operators rarely do anything that borrowers cannot do for themselves. In fact, they can make matters worse. Experian, the credit reference agency, states that it "...considers the claims made by credit-repair companies to be bogus".
Malcolm Hurlston, from the Consumer Credit Counselling Service, agrees. "Credit repair companies are expensive and generally useless," he says. "There is a minor possibility that there is a genuine mistake on your credit file." This, though, is something that borrowers can fix themselves, at very little cost.
For people with genuine credit problems, the best first point of call is either a helpline such as the Consumer Credit Counselling Service, or a trained money adviser. Money advisers operate via Citizens' Advice Bureaux and will help clients put their financial affairs in order, and agree a manageable debt-repayment schedule if necessary.
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