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Home > Credit Cards > Credit Cards Guides > How to clean up your credit report

How to clean up your credit report

In today’s tumultuous UK and global economic climate, lenders are buckling down and tightening their lending requirements, making it increasingly difficult to be approved for a loan, credit card, or mortgage.

Now more so than ever before, your credit report must be in excellent condition in order to get a loan, mortgage, credit card, and much more.

Believe it or not, many utility providers and mobile phone companies are now performing credit checks on new customers, and those who fail to meet their minimum standards often must pay a hefty deposit just to receive the services they need.

Fortunately, if you are suffering from less than stellar credit, there are a few simple steps that you can take to get your credit back on track and secure the credit you need, when you need it.

Obtain your credit report

Before you can begin to clean up your credit report, you first need to know your credit score and the information contained in your credit report.

A good credit report can be viewed as your financial passport, allowing you be approved for credit or loan offers seemingly at will. The better your credit report and the higher your credit score, the easier you will be approved for credit and the better rates you will receive.

Thankfully, you can receive a copy of your current credit report rather easily from a few sources, such as Experian.co.uk, Equifax.co.uk, or CallCredit.co.uk. There may be a small fee for these services, but knowing what is on your credit report is an essential step in fixing the report and boosting your credit score.

Review and clean up your credit report

After obtaining your credit report, you need to thoroughly review it and have any errors fixed by contacting the credit agency and asking them to correct the error. For example, if your bankruptcy period has ended and it is still showing or a County Court Judgment has been paid in full, this needs to be reflected on your credit report.

If you have a solid case and are able to provide proof of an error, but the credit agency refuses to amend your report, you can file an official complaint with the Financial Ombudsman, which will look into the matter and have the error removed from your report if your complaint is valid.

If the error is unable to be removed, you can add a 200-word Notice of Correction statement to your report, explaining the incident in question. For example, if a recent medical illness caused you to miss a couple of credit card payments, the bigger story behind the missed payments will not be reflected in your report. Therefore, an explanation of the missed payments may influence a lender to overlook them and extend you credit.

Simple actions to repair your credit history

An obvious way of fixing your credit history is to simply make all of your credit card payments on time. In addition to paying more than your minimum monthly payments, this will show lenders that you are financially stable.

Also, excessive debt and carrying high credit card balances is often negatively viewed by lenders. Not only does this portray irresponsible lending, but your percentage of available credit, which is a metric that is often looked at by lenders, will be reduced as well.

Conversely, having too much available credit is also negatively viewed by lenders, because it raises a red flag that you may be able to accumulate excessive debt. Thus, any store credit cards or old cards that are no longer used should be closed while you pay down cards with existing balances.

Avoid numerous credit applications

As a general rule of thumb, you should only apply for a loan or credit card when you need to. If you find yourself in need of a credit card or loan, do not apply for several within a short period of time.

Not only will this negatively reflect on your credit score, but lenders will view numerous applications in a short period of time as a desperate need for immediate credit due to being financially unstable, and may result in you not being approved.

To avid feeling the negative consequences associated with applying for numerous credit cards, it is a good idea to know which cards will likely accept you, rather than applying for a variety of cards.

Credit cards for improving your credit

If you lack a solid credit history or have blemishes on your credit report, there are credit cards that have been specifically designed for normal people just like you who have found themselves in a similar situation. These credit rebuilding cards, such as the Luma credit card by Capital One and the Vanquis card, are ideal for those with a limited or less than stellar credit history.

These cards are readily available and typically come with lower limits and higher interest rates. However, the high interest rates can easily be avoided by regularly using the card for small purchases and paying off the balance in full each month.

By doing so, you will be able to rebuild your credit report, improve your credit score, and obtain a loan or more competitive credit card in no time at all.

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