9 Ways to Improve Your Credit Rating Even When You’re in Debt

Whether you’re in debt or not, there are ways in which you can help to improve your credit rating, giving you more chances of getting a good credit score in the future.

Having bad debt has a negative impact on your credit rating and credit score. Whenever you apply for a credit card, a loan, a mortgage, rent a property or get a contract phone, the way you have managed your finances (good or bad) in the past will have a major impact on the final decision.

If you have missed a payment, defaulted on a credit agreement or have a CCJ, this will be noted on your credit report and give you a lower credit score, meaning you may have less chance of getting credit now or in the future.

If you’re in debt, paying off what you owe will start to show on your report and it will, over a lot of time, increase your score.

Together with TSB, we have found that there are a number of things that you can check and do to try and boost your credit file, without clearing all your debt or applying for a high interest “credit booster” card!

Credit referencing agency

First of all, you need to sign up with a credit referencing agency. Let me start by saying that these companies purely hold and collate the information regarding your credit. They do not work out your credit score but purely show your history.

What your credit score is and whether you will be able to get credit is not the choice of the referencing agencies but solely on the credit provider.

The two main agencies to register with are Experian and Equifax. If you haven’t registered with either of them before then you are able to get free trials for 30 days.

You must remember to cancel before the end of your trial otherwise they WILL charge you and you won’t be able to get the money back (I’m talking about £15 per month here so not a massive amount but £15 is still £15!).

There is also a credit referencing agency called Credit Karma and ClearScore who offer a totally FREE check – with no costs EVER! However, they do not hold as much information so it’s sometimes best to check with a few companies to get the best overall picture.

Now you’re signed up and it’s time to start seeing what your credit file looks like and what you can do to boost your rating.

Get on the electoral register

One of the things that is always seen in your history is whether you are on the electoral register. Not only can you vote and have you say in local and national elections but lenders look well on people who are registered on the electoral roll.

Your credit file will tell you if you are registered or not so be sure to check this.

By just having your name on this list it can boost your score, making it easier to get credit in the future. You can register to vote at the Electoral Commission.

Cancel unused accounts

When looking through your file do you have any credit cards, catalogues or store accounts that have a zero balance (lucky you!)? Well cancel them. If you have an account that is inactive it doesn’t bode as well for you and closing the account will free up this credit for another application you may want to make in the future.

Where are you living?

If you’ve moved house then there is a chance that some of your credit accounts are not registered to the correct address. Maybe you are avoiding making payments? Well now is the time to face them and make sure that the account is registered to the correct name and address.

Does it look right?

Be sure to thoroughly check through any accounts you have against your name.

Do you remember signing up for the loan you see or the credit card? If something has been registered against you in error or you have been victim to fraud, someone else’s debt will be affecting your score!

Have you cleared a CCJ but it hasn’t been updated?

If there is something that is wrong with your credit history then you can report this to the referencing agency. They will investigate and remove it from your file if found to be wrong.

Joint debts

If you’re had a mortgage or loan or any other credit agreement jointly with someone else then this debt will reflect against you. Maybe it was an ex-partner or someone you used to house share with. If you have separated then you are also able to separate your self from the debt.

You will need to write a letter to the referencing agency and tell them what has happened for them to correct and update your credit file.

Notice of correction

Maybe you have a number of defaults on your history but things have changed today? Rather than a lender just seeing a bleak picture of your history, you are able to add a notice of correction to your credit file that will be reviewed when you apply for credit.

A notice of correction has to be less than 200 words and can explain the background of your report and this will be used as part of any future applications you make.

Template examples of a notice of correction from the Experian site are:

Example 1

I, Mr/Ms XXXXXX, would like to explain the circumstances that led to the late payments/defaults recorded against the account started on DD/MM/YY. I became unemployed and my income was reduced to XXXX. I unfortunately was unable to keep the original payment contract. I ask all lenders searching my credit report to take this into account.

Example 2

I, Mr/Ms XXXXXX, would like to explain the circumstances that led to the judgement dated DD/MM/YY. I became unemployed and my income was reduced to XXXXXX, and therefore unfortunately I was unable to keep the original payment contract. I ask all lenders searching my credit report to take this into account.

Just fill in the XXXX’s and send the notice of correction to the referencing agency for review.

Pay on time, every time

One of the best ways to keep your credit history looking good to is pay your debts when you say you will. Missing a payment will have a negative affect so if you are struggling talk to them to see if you can come to an arrangement on the amount you pay or the payment date – don’t bury your head in the sand.

Don’t keep applying for credit

Every time you make a credit application you get a mark on your file. Do this a few times in a few days and it makes you look desperate and more of a risk to lenders. If you want to make more than one application for any reason then try to do them over a longer period of time, not all in the same week.

Try to have a quotation done by the lender instead of an application search as it will show up differently and will not have such a bad impact.

Look settled

It may be harder if you’re a renter but, try to live in one place as long as possible if you are planning on applying for credit. The same goes for having the same long term job and staying with the same bank for a long time.

On your application where possible state a land line phone number with your application as it makes you look more settled and less of a risk to run with any money you borrow.

You can do this!

Also remember that you can easily fix your credit history yourself so don’t listen to any adverts that tell you they can boost your credit rating – don’t pay them!

So there you have it, nine easy ways to clear up your credit file, helping you become more credit worthy. When debt eventually get paid off, having the right information on your file will ensure that you can work towards getting a high credit score soon.

Using the ClearScore app, I was able to track my history and build up my credit score using these tips.

Even if you’re not in debt or bad debt, it is still worth checking your file to make sure everything is in order as you may one day need to apply for credit and don’t want to get a nasty rejection if it’s not just.

Written in collaboration with TSB