How to improve a bad credit score?

Probably you’ve already been there: your credit applications are declined one after another, you can’t get a new phone contract and you’re dreading that your new landlord won’t check your credit file. Whatever your specific experience is, by now you probably know the pain of having a bad credit score. But don’t give up - we’re here to help you turn that credit frown into a credit smile.

Why is my credit score low anyway?

Your credit score is calculated according to how you have managed credit in the past. There is always a risk to a lender when they loan money, so they use your credit report to see how much risk are they taking by lending money to you. They don’t see your actual score only your credit file - but a low score is already an indication that your credit file is not in great shape. Some of the reasons for this could include:

• You missed payments with credit or utility contracts
• You don’t have a bank account or any financial records
• Your outstanding debt is too high
• You had legal proceedings against you - such as county court judgments, IVAs or bankruptcy

If any of this applies to you you will need to improve your bad credit score. Here’s how to get started:

Get on the electoral roll

One of the easiest ways to improve bad credit score is to make sure that you appear on the electoral roll. This gives lenders a way to verify your name and address.

Build your credit history

If you have used little to no credit in the past, lenders are not going to know whether you can handle it responsibly. It’s important to start building your credit history. You can easily do this with Wollit Pro, where we will build your file every month with all 3 credit reference agencies.

Make regular payments on time

The most important thing is to pay the debts you already raked up. If you are having trouble making repayments, contact your lenders, get in touch with a debt charity and make a plan to repay what you can. Try to clear smaller accounts first, and consider consolidating any high-interest debt to a 0% account. This is going to do wonders for your credit file.

Keep your credit usage low

Lenders will look at credit utilisation. If you are using the maximum amount of every line of credit, lenders will assume that you are in trouble. Keep your usage below 30%. When considering credit cards, it is a great idea to stick to 5%. This can be achieved by using your credit card for subscriptions such as Netflix and Spotify.

Check for errors

You should be checking your credit file regularly. This means if your score starts to go down, you can take corrective action. It also means that if there are any errors you can challenge these and have them corrected.

Keep old accounts open

Don’t close credit accounts which you have already paid off. Keep your credit cards open, just make sure the balance is zero or cleared every month. This means that lenders see you have access to more credit than you’re using and keeps your credit utilization rate low. Both of these are very positive signs in lender’s eyes.

Consider a credit builder 

You can also use a credit builder like Wollit to help you build back your credit score. Our Pro membership will give you access to powerful automatic credit building with all 3 major UK credit agencies. We don’t do any credit checks, anyone get get started no matter where they are with their credit score. You also won’t have to worry about credit limits and utilisation rates.

How can I rebuild credit fast?

Unfortunately, when it comes to credit building there’s not a lot of very fast solutions. After all, lenders want to see consistency over months - so expect to see the biggest results in about 12 months. So, don’t wait around sitting on a bad credit score - start building now!