Having poor credit can make it difficult to secure loans, credit cards, or even a mortgage. It can be a frustrating and discouraging situation, but there are steps you can take to start building up your credit score. In this article, we’ll discuss 5 ways to help build poor credit.
Check your credit report and score
The first step to building your credit is to understand where you stand. In the UK, there are three main credit reference agencies: Equifax, Experian, and TransUnion. You can get a free credit report from each of these agencies, which will show you your credit score and any negative marks on your credit report.
Check your credit report for any errors, such as incorrect personal information or accounts that don’t belong to you. If you find any errors, contact the credit reference agency to have them corrected.
Get a credit builder card
A credit builder card is a type of credit card for poor credit score. Credit cards for bad credit, such as thimbl, typically have low credit limits and high interest rates, but they can help you build up your credit score over time.
Use your credit card for bad credit for small purchases and make sure to pay your bill on time and in full each month. This will show lenders that you can manage credit responsibly.
Register to vote
In the UK, being registered to vote can have a positive impact on your credit score. This is because lenders use the electoral roll to verify your identity and address.
Make sure you’re registered to vote at your current address. You can do this online or by contacting your local council.
Consider a credit builder loan
A credit builder loan is a type of loan designed to help people build up their credit score. These loans work by lending you a small amount of money, which you repay over a set period of time.
Like credit builder cards, credit builder loans typically have higher interest rates than other types of loans. However, if you make your payments on time, you’ll build up a positive credit history and improve your credit score.
Use credit responsibly
Finally, the most important thing you can do to build your credit is to use credit responsibly. This means making your payments on time, not applying for too much credit at once, and keeping your credit utilization low.
Credit utilisation is the percentage of your available credit that you’re using. For example, if you have a credit card with a £1,000 limit and you’ve charged £500, your credit utilization is 50%. Lenders prefer to see a credit utilization of 30% or lower, so try to keep your balances low.
You should never borrow more than you can afford to make the minimum monthly repayments for. Failing to make monthly repayments on your credit agreements will have a negative impact on your score and might mean your work rebuilding is damaged. Missing monthly repayments can also incur additional fees and charges on top of the interest that will be accrued on outstanding balances.
In conclusion, building poor credit can be a slow process, but with patience and persistence, you can improve your credit score. By following these 5 steps and making sure to use credit responsibly, you’ll be on your way to a stronger financial future. Remember that it’s important to stay on top of your credit score and report, as your credit rating can impact your financial options in the future.…