Your credit rating is important. It’s one of the main things lenders look at when deciding whether you’re a safe bet. So if you keep getting rejected – it might be because your credit rating is too low. Don’t worry – there are ways to fix it and get things moving in the right direction. While there’s no “quick fix” for a bad credit rating, these tips should be enough to get you started.
Why is Your Credit Rating So Important?
As we already touched on, credit scores are built up over time and show lenders how good or bad you are at managing money. While they aren’t the only thing lenders look at when you apply for a loan or credit card, they’re among the most important ones.
When applying for a loan, credit card, or some other financial product – the potential lender might consider other factors like your age and earnings, one of the main things they’ll look at is your credit score. A bad one could make it hard to sign up for lots of different financial products and could make your financial situation difficult.
You can get a poor credit rating from not being very good at managing money, or simply because lenders don’t know much about you. If you are often struggling with your debt or have been visited by bailiffs in the past, you might already have a poor credit rating. If you’d like to start improving it – let’s have a look at some tips…
1. Find out what is on your file
You can’t know where to start when trying to fix your credit rating issues unless you know exactly what’s on your file. There are loads of easy ways to check what your file contains, including some free online tools. You’ll not only be able to find out your credit rating but also other important information like missed payments and foreclosures.
When you find out what’s on your file, you’ll know how easy it’s going to be to fix any issues you’ve got. A bad credit file could take years to fix, although minor issues could be sorted reasonably easily. If you’re unsure exactly how to go about fixing some of the things in your file, ask a financial expert – there might even be some free advice available in your area.
2. Close unused cards
Lenders don’t like to see lots of different accounts and cards sitting unused – this looks like poor money management and could contribute to a poor credit rating. Close any accounts or credit cards that you don’t use anymore. Also, try closing your store cards and any other financial products that you no longer use.
3. Do not make too many applications
When you get rejected for a credit card or loan application, don’t apply for many more straight away. These rejections can show up on your file for a short period, and lots of recent rejections will be a red flag to other lenders. Try having a break and make sure you don’t make too many applications at once.
Read more: 10 Ways to Build A Credit Score Without a Credit Card
4. Get a prepaid card
If you’re struggling to get an actual credit card, you might want to consider a debit card or even a prepaid card. While debit cards are useful, they might not build up the same financial history and they might also be hard to get for someone in a lot of debt.
Prepaid credit cards are very easy to get as you simply load up the balance with real money, only when you’ve got it. You can’t borrow or spend anything you haven’t got – yet you still get the benefits of using a card. These prepaid cards can be a great way to learn good money management skills and also build up a financial history.
5. Build a credit history
Some people have poor credit ratings not because they’ve had a lot of debt or financial trouble, but because they simply don’t have much of a credit history. Lenders can’t know how likely you are to make repayments if they don’t have much evidence of your lending behavior in the past. So if you’re struggling to get accepted, try building up a good credit history slowly and carefully. You could consider one of those prepaid cards that we just looked at to get you moving in the right direction. You can also try payday loans with no credit check to start building a repayment history before you’ve got a credit card – just make sure you check the small print and pay it back quickly.
6. Do not make late payments
When you do have payments to make, either for loans or other credit cards – make sure you don’t miss any. This can be a huge turn-off for lenders and could impact your credit rating quite dramatically. Lenders don’t like to see people miss payments as they represent more of a risk. if you have a few missed payments recently, it might take a while for them to fall off your record, but make sure you manage your money as well as possible so they become a thing of the past.
7. Pay more than the minimum
When you’ve got payments to meet, either for loans or other financial products, try paying more than the minimum amount. Lenders love seeing this sort of good financial management and it’ll make you seem responsible for the money. it’ll also help you pay off your debt more quickly so you can build a better financial future for yourself.
8. Repay some of your debts completely
If you can afford it, try paying off some of your debts all at once. The less debt you’ve got in different places, the more likely you’ll be able to take out a new loan. Paying off could also improve your overall credit rating and it’ll make you look appealing to lenders.
Hopefully, these tips have got you heading in the right direction. Money problems can be difficult, but there are ways to fix your credit rating even if you’re struggling.
