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If you have a poor credit record you may be aware of the fact already, because you have fallen behind on hire purchase, loan or mortgage repayments; or perhaps you have had one or more county court judgements against you. To a lot of people, however, finding out that their record is not as clean as they thought it was can come as a bit of a shock when they are turned down for a loan or credit card perhaps. Either way the first port of call has to be the credit agencies, to find out just what it is that they have on record which could have a bad effect on your credit standing.

Every time that you take out a loan, every time that you move house, every time that a county court judgement is entered against you, every time you miss a payment which is due against your mortgage, a mobile phone agreement, a utilities bill, it is likely that the details will be recorded by the main credit reference agencies, who are Callcredit, Equifax and Experian. Frightening, isn't it! Your first move towards repairing a damaged credit rating is to find out just what information these companies hold on you, and you can do this by sending them a two pounds fee in return for which they will send you a printout of your record; their contact details are the bottom of this article. If you have been turned down for credit the company which has refused you is not obliged to tell you exactly why you have been refused, but it is under a legal obligation to tell you which credit reference agency it used.

One of the best ways to improve your credit rating would be to have a credit card for a while with a low credit limit; use it regularly and pay off the balance in full every month. You can get such a credit card from Vanquis.

Make sure that you do not spend more than you can afford; it is very important that you play off at least the minimum payment every month but bear in mind that interest charges can be heavy - it is a card for people with bad credit after all - however, if you pay off the whole sum regularly there will be zero interest payable and you will be viewed as a more reliable person so your credit rating should rise accordingly.

Click here to apply for a Vanquis credit card

It is entirely possible, particularly in these days of identity theft, that some of the details they hold are incorrect. If this is the case and you find errors they are legally obliged to correct their records but you will normally be expected to show why that record is incorrect. Please do not, under any circumstances, ask them to change something that is detrimental which happens to be true because giving them deliberately incorrect information will almost inevitably make your position far far worse than it was before; they make rigorous checks and it is pretty certain that any false claims will be discovered.Okay, it is now assumed that all the details on your file are correct, and one or two of them are not to your best advantage. How do you go about rebuilding your credit rating?

The first thing to understand is that the term ' credit blacklist ' refers to something that doesn't really exist. The credit reference agencies provide companies that are considering giving you credit with certain information, but they do not recommend whether or not credit is granted to you, that is left to the discretion of each company which is dealing with you, and they all have different ways of deciding whether to deal with you or not. For instance, many lenders which offer extremely low interest charges will only provide finance to people whom they consider to be absolutely first class prospective customers who can be relied upon to make all necessary repayments without causing any problems. On the other hand sub prime lenders (and yes, there are still some left!) Are not as fussy because they expect their clients to have imperfect records and they charge higher interest rates accordingly. A bad credit record therefore is like beauty, it is in the eye of the beholder; it will not necessarily prevent you from obtaining credit, but it could make it more difficult and almost certainly a lot more expensive.

If you wish to persuade companies that you would be a worthwhile client for them to deal with, you need to be able to show to them that there is the highest likelihood that you will keep your side of any bargain and meet all your financial obligations towards them. They will want to know that you are a stable person so it is important that you have the same address for a reasonably long period; people who move from one home to another regularly are often frowned upon. Your name should be on the electoral roll at your address, because many people who do not register have something to hide. You need to be financially secure, so it is imperative that you keep up any repayments that are due and that you pay your utilities bills promptly so it is a good idea to settle these by standing orders or direct debits as appropriate. Finally, you need to demonstrate that you are able to handle credit and this brings us to a paradoxical situation in which many people who have never taken out a loan in their lives can find that their credit ratings are less than perfect because the agencies have no data to go by. To solve this problem it would not be a bad idea to take out a credit card, use it sensibly and then repay every balance in full when this falls due, and this could be done quite easily by direct debit. If your credit rating is so poor that the mainstream companies will not give you a card then you may wish to approach a company like Provident Financial and apply for a Vanquis Visa card; yes I know that their interest rates are very high, which you would expect since their clients are usually sub prime, but if you pay the balance off in full every month this will not matter. By using the card sensibly over a period of time you will build up a better standing.

If you are having considerable difficulties in paying your bills as they fall due then you could be living beyond your means: if this continues you may be heading for the precipice and there is no magic wand that will transform your credit rating from bad to acceptable. In circumstances like this you may well have to make some very difficult lifestyle choices and perhaps either cut back drastically on your spending or increase your income by, perhaps, taking a second job or by ensuring that you are claiming any benefits that you are entitled to. If you feel you need help you could get free advice from the Consumer Credit Counselling Service or your local Citizens Advice Bureau.

These are the main credit reference agencies in the UK:

Experian

Equifax

Callcredit

Phone:  0844 481 8000

Phone: 08705 143700

Phone: 0870 060 1414
 

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