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How to improve your credit score

21st February 2019 Published by Hannah Dearden

How you could improve your Credit Score with 8 helpful tips

Having a bad credit rating can understandably feel quite frustrating, especially for those who are looking to apply for a mortgage, car loan or other forms of finance.

If that sounds familiar, you’ll be pleased to hear that there are measures you can take to gradually improve your circumstances and credit score. You’ll also be pleased to hear that we offer a range of Bad Credit Loans to our customers, perfect for those who may need to borrow up to £15,000 who may have been refused by other lenders.

With these 8 tips you could improve your credit score and leave your old rating behind

Track your credit score

Some credit report services charge a fixed or membership fee to track or request your credit report. In recent years, however, many of these companies have changed their practices, instead offering a free service or opting to recommend credit cards and other offers on their websites instead of a credit check fee.

To you, this simply means that you can track your credit rating for free, as well as receive recommendations from the service on more ways to improve your credit record. Free services generate monthly reports, allowing you to track your credit rating improvements in real-time.

Space out applications for credit

While credit reference agencies aren’t necessarily told if you’re rejected for credit, they are able to see the frequency of applications you make and whenever a search is made by a lender.

Simply put, don’t apply for credit in quick succession.  If possible, find out if you are likely to be accepted for a new line of credit before applying to avoid credit checks being made unnecessarily.

Close unused credit cards and other accounts

Lenders often take more than just the amount you currently owe into consideration when checking your eligibility for finance, they often also consider the amount of credit you have access to. This can be unused credit cards, store credit cards and even mobile phone contracts.

While you may not necessarily owe money to these dormant lines of credit, the access is still there, and there is potential to borrow more in the eyes of prospective lenders. To rectify this, close unused lines of credit and finance, and check for active but unused services such as old mobile phone contracts.

Cut financial ties

Having a ‘financial partner’ who has a bad credit score may bring your joint-score average down by association. This could be in the form of still having a joint bank account or a joint mortgage with an ex-spouse following a divorce.

These financial links may impact your own credit rating, so if there is an opportunity to do so, maybe it’s worth cutting financial ties. If this is an option, be sure to inform the appropriate credit reference agencies of the disassociation to ensure the other person’s financial history and future dealings could reduce the impact on your credit score.

Register on the electoral roll

The electoral roll allows lenders to validate your stated place of residence, subsequently improving your chances of being eligible for credit.

Living at the same address, maintaining the same bank account and working for the same employer for at least a 12-month continuous period may also help improve your credit score.

Ensure all future repayments are made on time

Missed or late repayments can appear on your credit record for up to six years, so it’s crucial that you make all of your outstanding credit repayments on time. This can also apply to late payments on utility bills such as gas or electricity.

Pay off outstanding debts as soon as possible

Paying off your debts ahead of schedule may also help improve your credit score as this shows that you’re making a proactive effort to repay what you have borrowed.

If you’re able to set aside a small budget each month to pay off debt, it will certainly pay-off in the long term (no pun intended!).

Use credit to build a history

For some people, it’s maybe not a ‘bad’ credit history that prevents them from being eligible for credit, it’s a lack of credit history. Some lenders are reluctant to lend to those who have no credit history whatsoever, as they’re unable to see if they’re likely to make repayments on time or not. Using credit sources like credit cards in a sensible manner can help build a positive credit history.

For example, using the card to purchase essentials that you would otherwise still purchase (such as a monthly train pass or food shopping, keeping to your usual budget) and then paying off the full outstanding amount each month with a direct debit.

So there you have our 8 tips to credit score recovery Remember, improving your credit rating is a gradual process, and requires ongoing care and attention. If you’re looking to borrow money and currently have a poor credit rating, you might like to view our range of bad credit loans.

 

Category: Saving Tips

What is a Bad Credit Loan? – All You Need to Know

18th May 2017 Published by Hannah Dearden

The Bad Credit Loan – All You Need to Know

A Bad Credit Loan is a type of loan designed for people with a poor or bad credit history.

There are many reasons that people can find themselves with bad credit and looking for a bad credit loan.  Everything from missing payments on previous or current credit agreements, through to having a County Court Judgement against their names.

People that are new to lending may also find themselves with a low credit score. This is because lenders don’t have access to any lending history to make a decision on.

A bad credit rating means that lenders will consider you a greater risk when it comes to you borrowing money.  Some lenders won’t lend to people with bad credit or poor credit. Other lenders will charge a higher return to reflect the increased risk.

The Pros and Cons of A Bad Credit Loan

Just because you have a low or poor credit rating doesn’t mean you cannot borrow money.  This can be good news for many reasons – including consolidating debts to make monthly payments more manageable, or perhaps to buy a vehicle to get you to and from work.

Taking out a Bad Credit Loan means that you can actually start to repair your credit rating.  As long as you always make your payments in full and on time, you are demonstrating that you can manage your finances responsibly.  Over time, good financial management could lead to an improvement in your credit score.

On the negative side, a Bad Credit Loan will probably cost you considerably more money than a loan to a person with a good credit rating.  A person with poor previous credit applying for a bad credit loan represents a larger risk to the lender and therefore the interest rate offered could be much higher.

Good to Know

So, your credit rating is not as great as you would like.  Here are a few things to think about before applying for a bad credit loan.

Interest Rates: The interest rates will vary. This is dependent on a number of factors; How much do you want to borrow? Over what period?  How poor is your credit score?  Is your borrowing ‘secured’ or ‘unsecured’?

Secured or Unsecured: The interest rate can sometimes be less with a secured loan.  However, your home is at risk if you do not keep up repayments on any loan secured against it. With a loan from Progressive Money, there is no automatic link to your property.

How Long to Take a Loan Over:  You should always remember that the longer it takes you to pay back a loan, the more interest you will pay. However, you should also make sure that the repayments are affordable.

Credit Scores: Whilst paying off a Bad Credit Loan in full and on time is a credit positive, the opposite is also true. If you do not keep up with loan repayments, it will have a serious negative effect on your credit score. If your loan is secured, your home could be at risk.

What are the Alternatives to a Bad Credit Loan ?

A Bad Credit Loan may not be the right financial product for you, so make sure that you do your research before applying. For free and impartial advice, you could visit moneyadviceservice.org.uk.

For further Progressive Money news and information, click here.

Category: Financial Guides

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