Many of us have at some time or another may have been in a situation where we’ve been refused credit. So here is some advice how to improve or maintain your credit rating.

What is a credit rating and how does it work?

Your credit score will vary between different lenders. That’s because they all use their own different methods of calculating a score based on their analysis of your credit history.


Your credit report lists all your credit accounts such as credit cards, store cards, mortgages, loans, car finance etc. –  a complete record of your repayment record and much more in fact. It can make all the difference between being accepted or declined for the card, short term loan or mortgage you want and what interest rate you may be charged.

So, here are some tips on how to achieve a great credit rating:

1.Check your personal credit file

Checking your credit report couldn’t be more simple. You can even view it for free. Make sure that all the information held about you on your credit report is correct and if not, contact the relevant lenders and get it removed. This may take a little time though – so it’s best to wait for a while until you apply for any credit.

2.Disassociate yourself from your financial partner

If you take out a joint mortgage or joint bank account with a partner you become “financially linked” with them so if they have a bad credit rating, it could impact on you.

If the two of you have split up, inform the credit reference agencies of your disassociation otherwise your ex partner’s financial dealings could still have an impact on your credit score.

3. Get on the electoral roll


Whether or not you ever intend to vote, getting on the electoral roll will dramatically improve your chances of being accepted for credit. Prospective lenders and credit reference agencies use the electoral roll to check your identity and your address history. If you cannot be found, then in all likelihood, you will be refused credit. Living at the same address, being in a job with the same employer and having the same bank account for a number of years will also help.

4. Close down any unused credit cards, store cards, direct debits and mobile phone contracts

Lenders take into consideration the amount of credit you have access to, as well as the amount of debt you have.

Leaving them unused or cutting them up is not a solution. You need to contact the provider directly and close the account. They will ask you why you want you to leave but don’t be talked out of it!

So, to stick to your guns and just close it down.

5. Don’t miss or make late repayments

Missed and late payments remain on your credit file for years. If you think you may not be able to meet a payment by the agreed date, talk to your lender. Most companies are quite helpful and understanding and may come to an arrangement with you allowing you some extra time. The most important thing is communication.

But at the end of the day, if you miss a payment or pay late, this will have a detrimental effect on your record. This also can apply to late payments for utility bills such as gas or electricity.

6. Pay off all your debts

Make more than just the minimum payment whenever possible. This shows responsible behaviour to a prospective lender. One of the most important things that a lender takes into account is that you are managing your debt well and that you’re making progress in repaying what you’ve borrowed.

7. Build a good credit history with a credit card


Many people think that if they have had no credit or debts, a lender will look favourably upon them but this is far from the truth.

If a lender can’t see any record of your financial details, they can’t assess the level of risk you may pose.

Take out a credit building credit card, make a couple of small purchases on it every month, and make the repayments via a direct debit from your bank. Over time this will build up a good credit profile for you by showing that you manage your debt responsibly.

Credit builder prepaid cards generally charge a small monthly fee (about £5), which you’ll need to maintain paying for 12 months. They will show on your credit file that you have made regular payments and repaid a debt. A prepaid card doesn’t require a credit reference because you don’t borrow money on it.

8. Spread out your credit applications

Credit reference agencies are not informed if you are rejected for credit, but they can see every time a credit search is made by a lender. The more credit searches that are carried out on you, the less likely you are to be accepted for credit. Spread out credit applications over a period of time and find out if you have been accepted by a company before making a new application elsewhere. If possible, try to find out whether you’re likely to be accepted by checking your credit report before applying or ask for quotes then apply for the loan meets your requirements..

For many of us a good, clean, well-managed credit record is as important as a driving licence. It gives you the freedom to apply for finance to buy a car, a house and many other things we need in a modern world.

So, look after it carefully, maintain payments, pay off debts by the deadline or earlier if possible, and don’t extend your borrowings to unsustainable limits.