Everyone should know their credit rating, because you never know what is around the corner and when you might need to borrow money.

Pre-2008 the banks were falling over themselves to lend money to everyone. After the banking crash and the banks are now all but bankrupt themselves so they avoid all risk and only lend to people with ultra-safe jobs and perfect lending records.

If your rating is less than perfect then you will find it difficult to borrow money and any loan you are offered will be at a higher interest rate. If you know your rating is poor you can get it up again before you actually need to borrow money.

Pay Your Bills

Pay every bill on time, every time. Utility bills are paid after you have used the gas or electricity, so the company has already supplied you with fuel on credit; if you have used it you have to pay for it. Failure to pay your gas bill by the due date will impact your credit record.

If you have a credit card, make sure that you never forget the bill; set up an automatic payment from your bank account if you have forgotten it in the past. Forgetting your bill costs you money in charges as well as adversely affecting your credit record.

If you have bank loans then make sure that you always have enough money in your account when the monthly payment falls due.

Pay off Your Credit Cards

You may have used your cards to rack up a lot of debt, you have the stuff, now you have to pay for it. When you use your card the goods are not paid for, rather you owe the card company rather than the shop, your debt has just been transferred from retailer to bank.

Paying off any credit card debt is difficult, partly because of the high interest rates. You can ask the card company about converting the debt into a loan, which will have a lower rate of interest, but be aware that this will reduce your credit rating. You have to decide whether the hit to your rating is worth it as a means to get rid of the debt once and for all.

Never leave a monthly credit card bill only partially paid. Pay it off in full every time

Prove You Are a Good Risk

Once your credit card debts are totally paid off you need to prove that you are financially responsible. You need to take out a bank loan, even if you don’t need one, just to prove that you can make your monthly payments on time.

Start by making regular payments into a savings account with your bank. After a year and when you have a substantial amount saved you should apply for a loan from the same bank. The amount you ask for should be less than your savings and you should keep up the monthly savings plan while you have the loan.

The bank officer you talk to will probably insist that your savings account is left intact for the period of the loan because that is the bank’s security if you default. He or she will not make any attempt to persuade you to use your savings rather than taking out a loan because the bank makes money when they lend you money.

When that loan is paid off, apply for another loan that is larger than your savings balance over a longer repayment period. As this loan progresses with a perfect repayment record, so your credit score will increase month by month.

Keep all your credit cards, but lock them away, even cut them in half to remove any temptation. Having the credit available and not using it says a lot about you and your credit score will be higher than if you closed the accounts down and just kept one.

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Rebuilding your credit rating can take years if it has been seriously damaged, but it is possible.