How to improve your credit rating in two steps

Simple steps to improve your credit rating.

Concerned about the state of your credit rating? The good news is that credit scores aren’t everything. It’s entirely possible to get a loan with bad credit – we can talk you through your options here. That said, a healthier credit score is a good thing to work towards. Not only does it make getting loan approval easier, but you’ll also get lower interest rates. Here’s how you can get things moving in the right direction.

What’s the damage?

It’s helpful to know what your starting point is. You can request a copy of your credit report online at Centrix, Dun and Bradstreet and Equifax. Credit reports are free, although your credit score is only included in paid versions. Your credit score will sit somewhere between 0–1000. To find out what the different scores mean, check out our guide here.

Read through your credit report and see what could be helping or hurting your score. You’ll see details of your credit enquiries, regular payments as well as defaults, court judgements, and any overdue payments where the lender has attempted to recover the money. If you see any incorrect details, you’ll have an opportunity to dispute them.

Once you know what you’re dealing with, you can start making steps towards improving your credit rating.

Tip 1: Pay your bills on time

Your credit score takes a hit each time you default on a bill payment. Repayments on personal loans, car loans and credit cards all count towards your rating. Utility providers are also technically credit providers, which means that your phone, gas and power bills all impact your credit report too.

Setting up automatic payments and payment alerts is a good way to keep on top of your bills and ensure nothing slips through the cracks. If you have multiple debts that you’re paying off, a debt consolidation loan might be an option to consider. This pulls all of your debts together so that you only have one payment to make. You may even be able to get better loan terms than you currently have.

Tip 2: Don’t max out your credit card

While having a credit card that you use and pay off can actually help your credit score, a constant maxed-out balance suggests to lenders that you’re unable to get on top of your debt.

If your credit card is nearly always at its limit, it might be time to step away from the card. Take it easy on the online shopping for a while, put the card away and create a repayment plan for yourself. Don’t forget; credit cards also have a minimum payment due each month. Take note of the date and refer to tip 1.

We work with a range of trusted lenders and find the fairest terms to suit each person’s unique circumstances. Our online personal loan calculator can give you an idea of the kind of terms you might be looking at. If you like what you see, you can apply for a loan online. Our process won’t affect your credit score, and you’ll have an answer within 60 seconds. Easy as that.

This blog is provided for general information purposes and is not a recommendation you enter into or exit any particular loans or insurance policies. Information on the blog does not take into account your particular circumstances, including your objectives, financial situation or needs. We recommend you seek advice from a financial adviser before taking any action as appropriate. The Lending People Limited (FSP240365) is a licensed financial advice provider and can provide advice on some types of personal loans, insurance. Find out more about The Lending People and how we may be able to help you.