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Improving Your Credit

Doing a few simple things can make a big difference to your credit score. As your credit affects the interest rates you receive on loans and mortgages, improving your score can save you a lot of money in the long run.

Check your Credit Report

One of the first things that you might want to do is to request a copy of your credit report and see what is actually appearing on it. There are now a number of places online that allow you to easily get a copy of your credit report. Some also offer ongoing services which allow you to keep an eye on your credit rating on a month by month basis.

Seeing your report will help you determine where things are going wrong. You will be able to see where your debts have gone to collections and where you are consistently making late payments. Finding out what is wrong can be the start to fixing them, and eventually fixing your credit and improving your score.

Also, check that everything on your credit report is correct. Make sure that loans that have been paid off are reported as paid off, your name is spelled correctly, addresses are correct, etc. If anything is not up to date and accurate, you can request that corrections be made or have inaccurate items removed.

Pay your Bills on Time

Perhaps the most obvious thing to do is to make sure you are paying your bills on time each month. Many people are late paying credit card and loan bills each month purely through lack of organization or forgetfulness. This not only costs money in late fees each month, it can also reflect badly on your credit report.

Talk to your Creditors

If you've already got into difficulty and are struggling to pay all your bills each month, a call to your creditors can often help. Most lenders are interested in working with you to find a way for you to pay back your loans and credit card bills. Setting up a payment schedule and sticking to it will improve your credit score and you will also start to see your balances come down.

It might also be worth looking into a debt management programme or a debt consolidation loan. These can help you reduce your monthly payments and spread them out over a longer period of time. While the amount of debt you have will remain the same at first, if payments are more manageable and you make these on time each month, it will look much better on your credit report.

County Court Judgments

If things have already gone beyond this point your report may show defaulted loans and judgments against you. Getting these judgments paid off will obviously help. Again, call your creditors. In some cases they will happily take a smaller amount as a lump sum rather than the even smaller amount they'd get selling your debt to a collections agency.

Even if you do manage to pay off a judgment, you should be aware that it will still appear on your credit report for 6 years. It should, however, show that it has been paid and this will look much better than if it were still unpaid.