Blogging Away Debt Our Journeys to a Debt-Free Life

by Susan Paige

Currently in the UK inflation has hit a 40-year record high due to a conglomerate of financial pressures including Brexit, the Pandemic, steep increases to everyday household foods (budget pasta, bread and minced beef reportedly rose by up to 50% according to the BBC). We’ve also seen a hike in the cost of utility bills, whilst energy costs are at a record high for 2022. Fuel prices have also soared with the cost per litre of Diesel clocking in at £1.90 at the time of writing this article. 

Lockdown saw changes to Stamp Duty which in turn created a housing boom which saw house prices climb at a rate not seen since the 1990’s. All these factors make perfect conditions for the consumer to be susceptible to falling into poor credit ratings.

Steps to Take to Re-build Poor Credit

If you have poor credit, there are a number of steps you could take to try and improve your credit score, from taking out a credit card for people with poor credit to enrolling to vote, we will go cover 6 options to try and help improve your credit profile.

1. Electoral Roll – Registering to vote via the official UK Government website is a great way to demonstrate to potential creditors that you have a fixed address, meaning a line of communication regarding any finance or credit agreements you may have in-place. It’s a quick application process and could help you on your way to an improved credit score.
2. Check your Credit File for Faults – You can obtain copies of your credit file from any of the Official UK Credit Rating Agencies (Equifax, TransUnion and Experian). Once you receive your copy of your credit file, you may want to check for any errors, suspicious activity or inconsistencies. If you spot an error, you can add a notice of correction to your file explaining the fault, the circumstances that caused the inconsistency and why it may be inaccurate by directly contacting the Official Credit Reference Agency directly and asking for them to review and consider amending it.
3. Check your Address is Uniform with your Current Address on your Credit File – As mentioned in step 1, address plays a big role in your credit score as it demonstrates a fixed line of professional communication for the lender. Check to ensure that your address is spelled correctly on your credit file and that there’s no lines of information missed from your address, as this will show as 2 separate addresses, instead of one fixed line of communication.
4. Credit Cards for People with Poor Credit – A credit card for poor credit, such as thimbl. could help you build up your credit score. These credit cards are designed to have low initial credit limits, typically around the £1,000 mark and higher than normal APR % at around 39.9% to promote small, timely repayments, without the ability to spend big, which demonstrates to creditors that you can manage your finances and pay on time.
5. Don’t Miss Repayments or Pay Late – This step is fairly obvious, but extra care should be taken to ensure you have setup your direct debit for repayments or budgeted for the repayments so that they can be made as missing this can have a negative impact on your credit rating. Taking time to work out your income and outgoing so you can budget for your expenses accordingly is a great step to take.\
6. Be Wary of Timing – If you have had a County Court Judgement (CCJ) in the past, consider waiting until after 6 years when the CCJ will drop-off your credit file before applying for credit, if possible. This is a good way to mitigate any further drops to your credit score.