Credit Repair Tips

Much of the increase in living standards over the last twenty years has been caused by the increased availability of finance, making it easier to get furniture, electricals, cars, or even holidays on credit agreements. Unfortunately, what this means is that it is now more important than ever to have a good credit rating to be able to keep up with those around you. `Credit rating` refers to how good lenders rate you as a borrower: while a poor rating might not prohibit you from any credit, a better one does open up lower APR rates, longer payment terms, and higher loan amounts to you.

One of the best ways to repair your credit rating is using the `rebuild` approach. This involves using whatever credit you can get to demonstrate that you are now a responsible borrower. There are credit cards specifically designed for this purpose, which have less st ringent acceptance criteria than other cards. The drawback of these is that they have much higher interest rates than normal (around 30% to 40% typical) and have low spending limits. However, the limits on these can increase like other cards to allow you to borrow more over time. The benefit of using this type of rebuild method is that credit cards allow you to make more than the minimum payment, so you have the option of paying it back quicker if you need to.

Generally, the more `messy` your profile on credit reference systems, the worse your rating will be. Having all your bank accounts, credit cards, catalogues etc. at one address will give a better overall picture to a lender to base their decision on, and you should try to put these at an address you`re likely to stay at for some time, as short stays at a number of different addresses can negatively affect your rating. For certain groups, e.g. young people moving away from home, using a parent`s address until you`re settled can be an effective way of maintaining a strong and clear profile. Similarly, registering to vote is one of the best things you can do to improve your credit rating, at no cost, as it gives lenders a trustworthy way of confirming your identity. It is possible to check your credit report using credit reference agencies, who will show their record of your credit and hire purchase arrangements, any CCJs or missed payments recorded against your name, as well as giving an overall general `rating`, and you can have this data amended if you find any mistakes.

Of course, it helps to avoid credit altogether, but this is not possible. If you`re in a difficult situation due to previous credit, you should avoid using credit for smaller day to day outgoings, as this can worsen the spiral of debt. Thinking about your spending habits more, and looking out for free stuff online can help you tighten up your lifestyle, and should always be combined with credit building techniques.

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