Boost your credit rating

If you’ve been denied credit due to a bad credit rating, don’t despair! As long as you’re over 18 and not trying to commit fraud, there are a few things you can do to boost your credit rating.

Learn more about how to boost your credit rating

Reasons you might be denied credit

Firstly, you should try to find out why you were turned down by the lenders, but it’s important to note that there’s no law obligating them to give you this information. Here are some of the most common reasons people are denied credit, and how to boost your credit rating to turn them to your favour:

Your name isn’t on the electoral roll

This can happen if you’ve moved house recently, or if you’ve been living overseas for a while. Head here to contact your local council to register for the electoral roll, but remember it can take several weeks for the forms to be processed. If you have household bills with your name on them, show these to the lender, who may accept them as proof of address.

You have County Court Judgements against you

If you have been ordered to pay a CCJ by the county court, the only solution is to pay the fines off as soon as possible. If you do not do so within one month this will be held on your record, which may cause difficulties when it comes to obtaining credit.

If you can’t pay the debt off within one month, apply to the court for a Certificate of Satisfaction for £10. The CCJ will remain on your file for six years but potential lenders will be able to see that you’ve paid the debt.

If you are unable to pay the amount specified then you should ask the courts to “vary” the order by completing a form N245, obtainable from the court. They will ask you to give information about your regular income and expenditure and you may have to pay a £50 fee to submit this application.

To find out if a CCJ has been registered against you, search the online register run by the Registry Trust. Fees start at £8 for a search of the register.

You are bankrupt

If you’re trying to secure more than £250 worth of credit, you must declare to the lender if you are bankrupt. After declaring bankruptcy, you may have to wait up to a year before you can get credit. For more information check out The Mix’s “what is bankruptcy” guide.

You’ve missed payments

Information on your student loan is included in your credit files. This means that if you’ve missed a payment to the student loans company it will show up as a black mark on your credit rating. This will make it harder to get credit from banks and other lenders when they run a credit check on you.

You have little or no credit history

A common problem for young people or people who are new to the country is a lack of credit history, meaning companies have no data to assess you on. One of the best ways to build your credit history is by using a credit card and paying the bills in a timely manner. As with anything credit related, however, just make sure you don’t bite off more than you can chew when you’re using it!

Account information held by a credit reference agency

This includes records of your current credit, recent applications for credit, repayment history, home repossession and so on. It only contains factual information, without anything judgemental.

  • If you have recently applied for several credit deals at once a lender may think you are a risk because you’re overstretching yourself financially. You may have more luck if you cancel the least essential applications and concentrate on one or two that are the most important.
  • If you haven’t kept up the payments on something, go back and pay off what you owe. Once you have put things right, remember it takes at least a month for this new information to reach the credit reference agency.
  • As mentioned above, they might simply not have enough information to know whether you can pay off a debt or not. One way round the problem is to take out a different credit agreement for something much less expensive, and keep up with these small repayments.
  • When you have made these changes, wait for a month and reapply to the lender who refused you credit before.
  • There is nothing to stop you trying a different lender. They all have different rules, and another may accept your application straight away.

Check for wrong information on your credit file

You have the right to see any information held about you by a credit reference agency for free, and to have any mistakes corrected.

There are three major credit reference agencies:

For full details of which banks use which credit agency, look on the MoneySavingExpert website.

Next Steps

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Tags:

credit

By Holly Turner

Updated on 06-Jun-2021