I read a fascinating article entitled “Healing a Wounded Credit Score” in todays New York Times by Tara Siegel Bernard and while the information is written for an American reader, I feel that similar information should be made available to those in the UK.
Once people find out that I run a debt collection agency, the one question I’m generally asked is how can I improve my credit score? Especially in light of numerous companies advertising “Credit Repair services” or “We can improve your credit worthiness”, the bottom line is that any improvement in your credit file takes time, hopefully the following will be of assistance.
Often the first time that someone realise that they have a problem, is when they have a credit application rejected. However upsetting this is, it should prove to be a welcome wake up call and your first action should apply to Equifax (www.equifax.co.uk) or Experian (www.creditexpert.co.uk) for a copy of your credit file.
The reason that you should check your credit file is that all credit providers will base their decisions on your “score” and what is shown in your file. Decisions are made by checking how many credit applications have been made in the previous 6 – 12 months,. These could be for a mobile phone or an insurance policy or a store card too many and you won’t be awarded credit. Likewise, too few will also count against you. They will then note if you are or have ever been in default and finally if you’re the subject of any County Court Judgments or the subject of an IVA or have been declared Bankrupt. If your file shows no adverse information, you should appeal the decision.
However, if you’re file shows wrong information, say that you are in arrears or defaulted on say an insurance premium your first action should be to contact the company concerned and ask that they correct the entry. If they won’t then contact Equifax & Experian and they can force the company to make the correction.
What should you do if the information is correct? Simple if it’s just the case that you’ve missed a payment the best you can do is make sure for the next 6 months is that you don’t miss any payments. If you haven’t missed a payment, check how many applications you’ve made and don’t apply for anything for say 6 months.
What should you do if you were declared Bankrupt or entered in to an IVA and your bankruptcy /IVA has been satisfied?
First thing that you must realise is that for your Bankruptcy /IVA status will be shown on your credit file for the next 6 years. However, once you have been discharged you can start the process of repairing your credit worthiness. The first thing you will need to do, if you haven’t got one is apply to a bank for an account. The account you’ll be offered is called by different names by each bank, it could be called an Easy Account or cash account or even a non-status account. Whatever it is called the bank will not offer you a current account that pays interest or provide you with a cheque book.
Once you have an account open, you will need to show that you can maintain a healthy account for at least 6 months. After that you should look at applying for a credit card which is aimed at people with a poor credit history, such cards are Vanquis, Granite or Capitol One. While you may be offered an account you will only be given a small credit limit of around £250. Please be aware that these cards charge a very high interest rate if you do not settle your account in full at the end of each month. Provided that you maintain a healthy use during the first 6 months, the card provider will generally increase your credit limit to say £500. This is your first sign that you have begun to repair your credit file.
I know that having been declared Bankrupt, a credit card is probably the last thing you want to have and if you feel this way then you should consider a pre-paid credit card. This card is not a credit card but works exactly like the credit cards that you would have known and abused over the years. The big difference is that before you can use it, you have to deposit money in to your card account. The good thing about these cards is that you are not credit checked when you apply, but they still count to improving your credit worthiness and look no different to a standard credit card.
I hope that this is of assistance but if you have any questions please do not hesitate to email me david@deanemcollections.co.uk. Or if you prefer make an appointment to see one of the advisors attached to the C.A.B.
For further details about David or Deanem Collections Ltd please do not hesitate to visit our website www.deanemcollections.co.uk
Once people find out that I run a debt collection agency, the one question I’m generally asked is how can I improve my credit score? Especially in light of numerous companies advertising “Credit Repair services” or “We can improve your credit worthiness”, the bottom line is that any improvement in your credit file takes time, hopefully the following will be of assistance.
Often the first time that someone realise that they have a problem, is when they have a credit application rejected. However upsetting this is, it should prove to be a welcome wake up call and your first action should apply to Equifax (www.equifax.co.uk) or Experian (www.creditexpert.co.uk) for a copy of your credit file.
The reason that you should check your credit file is that all credit providers will base their decisions on your “score” and what is shown in your file. Decisions are made by checking how many credit applications have been made in the previous 6 – 12 months,. These could be for a mobile phone or an insurance policy or a store card too many and you won’t be awarded credit. Likewise, too few will also count against you. They will then note if you are or have ever been in default and finally if you’re the subject of any County Court Judgments or the subject of an IVA or have been declared Bankrupt. If your file shows no adverse information, you should appeal the decision.
However, if you’re file shows wrong information, say that you are in arrears or defaulted on say an insurance premium your first action should be to contact the company concerned and ask that they correct the entry. If they won’t then contact Equifax & Experian and they can force the company to make the correction.
What should you do if the information is correct? Simple if it’s just the case that you’ve missed a payment the best you can do is make sure for the next 6 months is that you don’t miss any payments. If you haven’t missed a payment, check how many applications you’ve made and don’t apply for anything for say 6 months.
What should you do if you were declared Bankrupt or entered in to an IVA and your bankruptcy /IVA has been satisfied?
First thing that you must realise is that for your Bankruptcy /IVA status will be shown on your credit file for the next 6 years. However, once you have been discharged you can start the process of repairing your credit worthiness. The first thing you will need to do, if you haven’t got one is apply to a bank for an account. The account you’ll be offered is called by different names by each bank, it could be called an Easy Account or cash account or even a non-status account. Whatever it is called the bank will not offer you a current account that pays interest or provide you with a cheque book.
Once you have an account open, you will need to show that you can maintain a healthy account for at least 6 months. After that you should look at applying for a credit card which is aimed at people with a poor credit history, such cards are Vanquis, Granite or Capitol One. While you may be offered an account you will only be given a small credit limit of around £250. Please be aware that these cards charge a very high interest rate if you do not settle your account in full at the end of each month. Provided that you maintain a healthy use during the first 6 months, the card provider will generally increase your credit limit to say £500. This is your first sign that you have begun to repair your credit file.
I know that having been declared Bankrupt, a credit card is probably the last thing you want to have and if you feel this way then you should consider a pre-paid credit card. This card is not a credit card but works exactly like the credit cards that you would have known and abused over the years. The big difference is that before you can use it, you have to deposit money in to your card account. The good thing about these cards is that you are not credit checked when you apply, but they still count to improving your credit worthiness and look no different to a standard credit card.
I hope that this is of assistance but if you have any questions please do not hesitate to email me david@deanemcollections.co.uk. Or if you prefer make an appointment to see one of the advisors attached to the C.A.B.
For further details about David or Deanem Collections Ltd please do not hesitate to visit our website www.deanemcollections.co.uk
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