Last week, we broke down the subtle differences between credit scores and credit ratings. So now that we have a clear understanding of how the two differ, what are some next steps to take if your credit rating is low? Never fear, we have you covered. Here is a quick guide to some action steps you can take today to start raising your credit rating:
Make Sure You’re Not Missing Any Payments
Oftentimes, a person’s credit rating will drop due to missed payments. This isn’t always due to a lack of funds, but in many instances, a lack of organisation. Life can get hectic, and sometimes bill payments slip through the cracks. In many cases, late payments for utilities or credit card payments will also take your score down. Make sure that you are paying your bills on time and in full, which will (over time) help to raise your credit rating. You may also consider setting up standing orders or direct debits with your providers so you never miss another payment again.
Register on the Electoral Roll
Creditors use your address to verify your identity when you apply for various forms of credit. By registering on the electoral roll, you make it far easier for potential lenders to confirm that you are who you say you are. Learn how to register here.
Start Rebuilding Your Credit
Another great step is to start building your credit. This process will take time, and you won’t see results overnight, but this is a crucial step in bolstering your overall credit rating. Start by applying for a credit card that has a small limit, and then use it consistently. Making frequent purchases with your credit card (like groceries and fuel) that you then pay off each month will start raising your score. This process shows lenders that you’re reliable and are able to pay off your debts consistently (and will raise your credit rating in the process!).
Sever Any Non-essential Financial Connections
If you have any previous financial connections to another individual that are no longer essential, you might consider severing those connections. For example, let’s say you have a joint bank account with an ex-husband/wife. If you have no further personal dealings with said individual, it will most likely be within your best interest to cut ties with that person financially as well. They could have a bad credit history that may be pulling yours down since you have a financial connection with them. Shedding that weight can dramatically improve your credit rating.
Check Your Credit Report
Lastly, as you take the steps outlined above, you’ll want to check your credit report. This will let you keep tabs on your credit rating and score (and whether or not they’re improving). It’s also important to monitor your credit report for any errors that are tarnishing your rating that you may want to dispute. You can start by signing up for ScoresMatter! We give you access to your report and score so you can monitor your credit rating as you take the steps we outlined above. And make sure to stay tuned to the ScoresMatter Blog for more step-by-step guides and resources.
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