If your credit score is low or has recently dropped, you might be wondering what went wrong or, more importantly, how you can fix it. The best thing you can do is to not panic, which can be easier said than done, especially if you’re relying on a decent credit score to buy your first home or finance a big, once in a lifetime purchase.
But getting your credit score back on track might be more straightforward than you think, especially if you follow these simple steps:
Understand your credit history
The initial task is to make sure you fully understand how your credit report works and where it can be improved. Your score is based on a variety of factors relating to credit you’re borrowed both in the past and more recently.
The issue could be as simple as you haven’t built up enough of a history to give you a good score or you’ve only recently taken out some form of credit. If this is the case, lenders won’t know how much of a risk you are (or not) so you’ll need to allow some time to increase your credit score.
There’s also the chance that a lower score is down to a mistake on the report. If this is the case, you should be able to fix it without too much hassle. If the issue lies a little deeper, it’s a good idea to develop a strategy to resolve it.
Create a repair plan
If you’ve got debts, it’s wise to work out which is costing you more. Try and pay off any high interest debts first before clearing other types of loans.
If you’re struggling with debt and can’t see a way out of it, it’s important to seek support from an organisation such as Citizens Advice.
Start positive habits
Implement positive habits to boost your credit score such as making regular debt payments, paying back more than the minimum on any credit cards you have and ensuring you get registered on the electoral role.
Refrain from making too many credit applications, especially within a short time frame and monitor your borrowing.
Stay consistent
Credit histories and reports can be complex and it can take time to build back up a poor report. That’s why it’s vital to remain consistent with your plan and refrain from borrowing credit that you don’t need.
If you have long-term goals, it might make it easier to stick to your plan so keep these in mind when you take into account your monthly budget.
Finally, don’t be disheartened by one less-than-ideal credit report. Your score will change over time and, as long as you stick to your new strategy, the numbers will be headed in the right direction.
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