How to repair your credit rating
Time and patience and a fair degree of organisation is the key to repairing your credit rating. Many people with a bad credit rating have not got into the situation because they are short of money to settle their debts, it is usually down to a lack of simple organisation and inability to pay them on time. How often have you reminded yourself to pay a credit card bill that day only o find that a week later you still haven't done it? More often than not, it is only when the next statement arrives with a missed payment charge do you realise. Mising the next one as well becomes so easy then.
If this is the main reason that you have a bad credit reating, then it should not pose too much of a problem to repair your credit. However, if you have a collection of CCJ's against you, then you have a far more serious problem to resolve..
Step 1
It is not easy to give a definitive plan as there are no real rules. The first thing to do is arm yourself with your credit report and check that it is factually accurate. (See the pages Consumer Credit Information & Why You Need Your Credit Report for further information on how to do this.)
Step 2
Write down all of the credit commitments that you currently have. Credit cards, bank loans, personal loans, store cards, mortgage, hp or car loans, and any other finance that needs repaying. You need to be meticulous with this. Missing one out and making further late payments will undo all the repair work that you are about to do.
Once you have all the credit commitments listed, write down the monthly repayment amount and the date it needs to be paid. (NB the due date is NOT the date that you send the payment - you need to send the payment with enough time for it to reach the lender and for the cheque or payment to clear! )
Add up all the payments. You need to make sure that you set aside enough money out of your salary each month to make all the payments for a month. If you discover that you do not have enough salary each month to cover your repayments, then you have uncovered the root cause of your problem - you are over comitted. It is critical that you do something about this immediately. You may have been trying to do this by getting a consolidation loan when you discovered that you were being refused credit. Please visit the page about Debt Consolidation and see what we could do to help you.
Step 3
Assuming that you do have enough salary to meet your financial commitments each month, you now need to get organised. Contact all of your credit and loan Companies and ask for them to set you up on a Direct Debit payment scheme. The objective is to get back in control of your repayments, and get your credit file showing that you are not missing monthly payments. If the repayments happen automatically each month, it takes away the problem of you having to remember to pay them, which is where the trouble may have started in the first place!
If you cannot set up Direct Debit Payments, then get yourself a calender and write down the dates for all the payments you need to send each month, along with the amounts. You need to make it a subconcious thing that each morning, you check the calander for the payments that you need to make that day and ensure that they get posted.
Step 4
If you are in arrears with any of your creditors, you need to correct this as soon as possible. If you cannot afford to bring the arrears up to date, you may wish to look at getting rid of that particular loan or debt. A consolidation loan may help here. All About Loans is a broker that can do this for you. We will work for you in sourcing the best rate loan available to suit your circumstances and your requirements
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This plan is not a 'quick fix' and may take up to a year to take effect. (Your credit file records payments made over the last year). By following the steps set out in the plan, you will start to rebuild your credit rating. One of the first things that a lender looks for in a credit file when assesing how creditworthy you are is if you have missed any payments, and if so, how often and for how much. If you follow this plan, you will be building up a picture of someone who regularly pays their debts on time and you will become the ideal candidate in the lenders eyes.
Remember though that for this strategy to work you must get organised. It is likely that the reason your credit rating is bad in the first place is because you lacked organisation when making your repayments.
