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How to improve your credit rating

Mar 18 2004

When it come to assessing an individual’s application for credit, banks and other lenders will focus on two main issues: your credit history and your credit score. They will be looking for some form of evidence that you can handle your finances responsibly. Other factors also come into play.

“When it comes to opening a business account, we don’t just look at credit scoring – we assess the quality of the business plan – you need to instil confidence in your lender,’ says Stephen Finch, of Lloyds TSB.

It’s also possible that credit rating information held on you might not be correct, so it’s worth checking this out to ensure it is accurate. You will need to contact a credit reference agency and pay a fee. There are three agencies in the UK – Experian, Equifax and Callcredit. At Experian, for example, the fee is £2.00 if you order a personal credit report online or by post, or £2.50 by phone.

Equifax offers the following advice on what steps to take to help improve your credit rating.

Consider asking for help. If you can’t qualify on your own, ask a friend or family member to co-sign for small loan or credit card. If you can stay current on a major credit card account or small car loan, this will speed up the process of re-establishing good credit in your own name

Consider a secured credit card. This is guaranteed by a deposit that you make with the credit grantor. The cards offer the purchasing power of a major credit card. Just make sure the grantor reports payment histories to one of the credit reference agencies so you’re building your positive payment history

Be patient. It takes some time for your new credit history to gain momentum. You’re demonstrating that you are not depending on certain credit cards and loans for your financial survival

Use new accounts in moderation. And make payments that are more than the minimum. You can keep a small balance so that your positive payment history will continue to show up on your credit report.

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