If you’re just starting to establish your credit history or if you’ve had financial issues in the past, you probably have poor credit. Here are some of the things that contribute to a poor credit rating. Focusing on these may help you build credit.
For those just starting out or if you’re new to the UK, you’ll generally have a low credit score because you have little demonstrated history using financial products responsibly. Getting a credit card and using it responsibly can help you build your credit score.
Late Payments & Financial Judgments
If you’ve had trouble paying your bills or have CCJs, this is reflected in your credit report. Lenders deem you more likely to not make payment. However, that doesn’t mean you can’t start over. Ensure you pay your bills on time going forward. Using a credit card responsibly can also help you rebuild your credit rating.
Too Many Applications
If you have poor credit, it’s understandable that you try to apply for a number of credit products. The problem is, every time you apply, even if your application is unsuccessful, your credit report is impacted. Avoid applying for too many credit cards, loans, and other credit products. Fortunately, sites like TotallyMoney help take the guesswork out of applying by showing you how likely you are to eligible for a credit card.
Many Open Accounts
If you have a lot of accounts open for things like credit cards and store cards, it’s best to consolidate them. Lots of accounts show lenders that you are at risk of borrowing more than you can manage. Transfer balances to a lower interest credit card and cancel unused cards to help improve your credit rating.
If you move too much, this can also impact your credit report as it may reflect a lack of financial stability. Lack of documentation about your official residence can also have a negative impact. Lenders use the Electoral Roll to verify addresses so register to vote at your current address if possible.
Errors & Fraud on Your Report
Most people don’t take the time to check their credit report, but you should do so at least once a year— perhaps more if you’re trying to rebuild your credit. Often, people are surprised to find errors on their report. Some are even more surprised to find suspicious activity. If either applies, contact the credit reference agency where you accessed your report so that notes and amendments can be made to your credit report.
The Luma Card is issued by Capital One (Europe) plc. Registered office: Trent House, Station Street, Nottingham NG2 3HX. Registered in England and Wales. Company Number: 3879023. VAT Registration Number 690 6861 01. Authorised and regulated by the Financial Conduct Authority. Register Number: 204440.