Improve your credit rating

As a parent, it’s good to know you can borrow money at favourable rates as and when you need to and for that you need a good credit rating. When you apply for credit with a company, it will (with your consent) check your credit score through a credit reference agency of which the three main ones are Experian, Equifax and Call Credit.

These companies hold your credit report, which shows how you have repaid credit in the past and lenders take it as an indication of how you will repay credit in the future. Even if you have always been good with money, your credit rating could still be poor. This may be because lenders don’t have enough positive credit history to go on and therefore class you as high risk, making them reluctant to lend to you. The good news is, your credit history can be improved over time. Here are five steps you can take to improve your credit rating.

1: Register on the electoral roll
 
To register on the electoral roll you will generally need to complete a voter registration form and return it to your local authority. It is vital you do this every time you move house. Visit the local government website to find out more.
 
2: Stop applying for credit you won’t get
 
Every time you apply for credit the ensuing credit search is noted on your credit report. If you have applied and been rejected several times, your credit history may be getting worse and worse.
 
3: Check your credit report
 
This will show you the areas that you can improve on and also means you can check for any errors that might be on your report and get them changed. You may be able to obtain a copy of your credit report for free from Credit Expert.
 
4: Open a higher interest credit card
 
You are more likely to be accepted for one of these if you have a poor credit rating. Make sure you manage it properly through repaying every month in full, spending a little each month for six to 12 months.
 
Examples of higher interest cards that can be used to repair bad credit are:
 

• aqua Card: Typical 35.9 per cent APR variable
• Vanquis: Typical 39.9 per cent APR variable
• Monument Visa Card: Typical 34.9 per cent APR variable

5: Curb your card spending
 
This is the most obvious step of all, try to minimise any debt on your cards. As a rule of thumb, you should try to keep the debt on a card under 30 per cent of your credit limit.
 
Photo credit: The Truth About on Flickr