For lenders, a borrower’s credit history is key - lenders want to know that you’re trustworthy and that you’re likely to pay the loan back on time. But what can you do if you don’t have the strongest track record with debt? It takes time, but there are some effective strategies to repair your credit history.
Understand What’s Driving Your Credit Score
Although a credit score isn’t just an abstract number, the criteria that credit rating agencies use to determine your score can often seem mysterious. Privacy law allows you to request your credit history from reporting agencies but it’s historically been a lengthy process. Innovation has led to more accessible reporting - Credit Simple allows you to quickly gain access to your score and credit history. Your credit report should give you a good idea of what’s driving your score - defaults on your record are likely to explain a poor score, while a lot of credit enquiries in a short space of time might explain a smaller dent.
Put the Record Straight
If something in your credit history doesn’t look right, you’re entitled to request a correction. Things, unfortunately, go wrong from time to time - payments aren’t processed or identities become mixed up. If someone else’s mistake is dragging your credit record down, be sure to say something.
Develop a Good Payment History
If you’re already struggling with debt, this can be a tricky task. Defaulting on debt is highly detrimental to your credit score so, to get good credit rates and deals, it’s essential not to default. In the past, a default often meant a person’s credit history was tanked for a very long time. More recently, credit reports have taken a turn for the positive; since 2012, lenders and service providers are able to provide credit reporting agencies with positive (as well as negative) information. This means that consistently keeping up with your payments can help you develop a solid credit history - or to repair a record that's not so great.
Consider Consolidating Your Debt
If you’ve lost control over your debt, consolidating that debt into one loan (generally at a similar or lower interest rate) may make it easier to avoid defaults and keep up with payments. With one monthly payment and no early repayment fees, a debt consolidation loan from Harmoney could help you take back control and improve your credit history.
For more helpful ways to get on top of your credit, download our eBook "10 ways to a better credit rate". It explains Comprehensive Credit Reporting and can help you improve your creditworthiness.