I want a fresh start to my credit score

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Fresh Start

If you’ve previously had a poor credit history and you need to make a fresh start, you should be aware that it is a long term process. Re-establishing a good credit history takes time. There are no shortcuts or tricks that can take you from a poor or low credit score to a high credit score in a matter of months or even years. Your Credit Score is based on a number of factors such as payment history over time and length of time you’ve had credit. It is important to establish a credit history and even more important to take the time to do the right things to maintain good credit.

Any lender decides to offer you a loan, give you a credit card or extend any form of credit based on their view of your ability to repay that borrowed money plus whatever interest they charge. They need to make a judgement about how responsible a borrower you will be by checking you Credit File and your Credit Score. Your Credit Score is basically a number that summarises the credit information on your Credit Report. There is no such thing as a 'Standard Credit Rating' or a universally agreed 'Credit Rating System' and no such thing as a 'Credit Blacklist' either. Your Credit Score is determined by each separate lender making their own judgements. They will all score you differently even though the information they use from your Credit File to reach that judgement is the same.

You can’t influence the method a lender will use to calculate your Credit Score directly, but that score is based on the information held on your Credit Report. So it’s important to make sure that the information about you on your Credit Report is as up to date and as accurate as possible. Improvements to your credit history can be achieved by doing this, but the best way to increase your chances of being accepted for credit is to manage your finances and your existing credit responsibly and prudently. Maintaining accurate information on your Credit Report won’t change anything if you continue to over commit or stretch yourself with credit commitments you really can’t support, miss payments, make late payments or fail to advise lenders of any change in your circumstances.

Here are some simple ways to build up a good Credit Score:

  • Pay your bills and make any repayments on time. This applies to all monthly bills such as gas, electricity, mobile phone contracts, catalogue or other accounts. Some of these on time payments will be reported to the Credit Reference Agencies, helping you build a good Credit Record.
  • Remember to leave time for your payment to reach its destination. Postal payments can often take 5 or more days while online payments will often be significantly faster. Make a note in your diary or calendar for the day on which you need to make the payment so that you don’t forget!
  • Pay at least the minimum repayment stated on your monthly bill. If you can’t remember how much this is, then check! It’s far better to overpay than to underpay, as an underpayment may be reported to the Credit Reference Agency as a non payment. This will not help you build a good Credit Record!
  • Stay within any credit limits that you may have. If you exceed your credit limit then that too will be noted on your Credit File and will damage your Credit Record.
  • Register on the Electoral Roll. Even if you are not a UK citizen and are not allowed to vote in all elections, registering on the Electoral Roll will help lenders find you and will improve your Credit Record.

If you have had a long relationship with your bank, approach them first to see if they can help you get a credit card. They should know you and your existing banking relationship may carry some weight when it comes to seeking credit.

If you’ve recently moved to the UK, find out if your bank has any branches in the UK and issues credit cards here. Again, they may consider you for a credit card if you have a good credit record with them in another country.

When evaluating your credit application, lenders will consider how often you move and whether you rent or own your home. Having an electricity, gas, telephone, cable, or water bill in your name also helps. Just having your name on these accounts won’t establish a Credit Score, but it can be helpful for first-time borrowers, especially if you pay by monthly direct debit, in establishing a track record of regular payment. Your employment history is also significant as lenders want to see if you are able to hold down a job or if there are periods of unemployment.

Sometimes none of these routes proves successful. You may have only recently moved to the area or the country and may have changed banks several times. In that case, there are providers that offer ‘No Credit History’ credit cards that take account of the fact that you don’t have a credit history.

These cards can help you establish and build your credit rating over time by demonstrating that you can successfully manage credit. In due course, you’ll then be able to apply for ‘Regular’ credit cards. Although acceptance can never be guaranteed you do stand a much better chance of success with these 'No Credit History Credit Cards'. They do charge higher interest rates (usually between 29.9% and 59.9% APR and the credit limit may be lower than ‘Regular’ cards. However, a higher APR and slightly lower credit limit is probably worth it for a credit card that will help you establish a sound credit history and allow you to get much easier access to credit in the future.

Next Steps

  1. Approach your bank to see if they will issue you a credit card
  2. Register on the Electoral Roll, even if there are no elections in the near future
  3. Leave 3 to 6 months between applications for credit
  4. Make sure you have some utility or other bills in your name at your address
  5. Never give false details on applications

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