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Jan 12

Why is it a good idea to try and repair a bad credit history?

Posted by:AutoMoney

Credit Report

Everyone should take some time out to manage their credit file – whether you have a good credit history or a poor one. Sometimes accidents can happen and black marks can be applied to your name in error, or in a fraudulent way, so it is always worth keeping an eye on your file perhaps once every six months.

But if you do have a less than satisfactory credit history, it doesn’t mean that it will always stay that way. There are certain things that you can do to improve and repair your score and, therefore, ensure that in years to come you are not penalised and also have the best deals made available to you. 

AutoMoney’s Top tips for repairing bad credit history:

  • Ensure that your name is on the electoral register – the electoral register is often used by companies offering credit to check where you live as a form of ID. If you are not on the register, although it may not result in you being declined for credit, it could delay the process, as you will have to provide some other form of proof of your address.

  • If your partner has a bad credit score, try to make sure that your score is not affected by not having joint accounts or bills set up in joint names. A bad score from your partner (even if you are not married), or sometimes even a flatmate, can reflect badly on you. So if they miss a payment, the mark may also be added to your file. However, if you can prove that there is no financial relationship between the two of you, you can contact the credit reference bureau and ask for this to be amended.

  • Make sure that if you split up with someone, you also split up from them financially. Ensure that joint accounts are closed down, bills are changed into just one name and matters are settled separately. It is important to think of the implications if your now ex-partner were to run up bills that you find yourself liable for in the future.

  • Be frugal with your credit applications. Each time you apply for any type of credit (loans, credit cards, mobile phone contracts, etc), you will leave a footprint on your credit file. Regardless whether your application is then approved or rejected, the result will be live on your credit file. So, for example, if you try and open five different credit accounts, you will look desperate to potential lenders and the chances of you getting credit become more difficult. If you think there is not a lot of chance of you getting approved, hold off applying. 

  • There are three main credit reference bureaux. Experian, Equifax and Call Credit. You can contact any of these and check your credit file – for a fee of £2. If there are any mistakes you are entitled to ask for these to be corrected. It is particularly useful to do this before you apply for any new loan – so that you can make sure there are no potential issues you didn’t know about. There may also be accounts on there, that you had forgotten about, with your old address. You should make sure you update the address details, or close the account if you no longer need it.

Overall, having a poor credit history is not the end of the world – you are not walking round with a ‘bad credit’ sign above your head, but it is worth thinking about trying to fix and resolve your credit history as quickly as possible to improve your chances in the future if you did ever need to get credit for something. 

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