Debt advice: How to improve a bad credit rating

For many people who have problems with debt, one of the worries they have to deal with is damage to their credit rating.

This is justified - problems such as falling behind on your debt repayments are likely to be recorded on your credit history, which can affect your chances of obtaining credit in the future.

However, there are things you can do to protect your credit rating. And remember - even if your credit rating is poor, you may still be able to borrow money, although it could be more expensive.

Explaining your credit rating & how to look after it

In reality, there is no such thing as a specific `credit rating`. Each lender has different criteria that they will need you to meet before they will lend you money, and they usually assess this by giving you a score according to what they see on your credit history (as well as other factors, such as your job and salary). In that respect, your credit rating may vary according to who is looking at it.

However, your credit history is the same to any potential lender: they will simply be looking at what has been recorded by one or more of the credit reference agencies (the main three in the UK being Equifax, Experian and CallCredit).

Any time you use or apply for credit, this will be recorded on your credit history. Each payment you make on time will be recorded, and so will any missed payments. Any entry on your credit history remains there for six years.

Repaying your debts on time is about more than just keeping your lenders happy: it could also make it easier to obtain credit in the future. Other lenders will be more likely to lend you money if they can see you have used credit correctly in the past; likewise, if you have missed repayments, they may be less likely to lend you money.

Protect your credit rating for the future If you are in debt and your credit rating is already likely to be poor, then it`s a good idea to take action to prevent your credit rating getting any worse.

In particular, it`s essential that you speak to a professional debt adviser about ways to tackle your existing debt. The right debt solution could help you to stop your debts from growing and ensure that you are making payments - even if they`re reduced payments - each month.

For help with your debts and advice on a range of debt solutions, call one of our expert debt advisers on 0800 195 2911.

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