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If you’ve got a bad credit score – or perhaps no credit score at all – then you might find it difficult to get lenders to allow you to borrow money. While there are lots of lenders who specialise in loans for people with bad credit (hello!), it’s a smart move to take steps to boost your credit score whenever you can, so that you’re set up for whatever the future may hold. Luckily, if you’re in a hurry, there are lots of quick and easy things you can do to turn your credit score around in no time.
Boost your credit score – Bamboo’s tops tips:
Step 1: Join the electoral register
You’ll find that we mention this on every post about how to boost your credit score – but for good reason: it’s important (and it’s also super quick). In fact, getting yourself on the electoral register is one of the quickest ways to boost your credit score.
Why does it make a difference?
When you apply for a loan, lenders search the electoral register to make sure that you’ve provided authentic information. Not appearing on the electoral register for your address (if you’re still registered to vote at your parents, for instance) can be a red flag for lenders and cause your application to be rejected. Luckily, you can head to Your Vote Matters to join your electoral register in not time. It takes about 5 minutes in total.
Step 2: Obtain a credit-building credit card
Credit cards are a great way to boost your credit score – but they’re also a very easy way to damage it too. However, a credit-building credit card has been designed for people in your exact situation: to help people with poor (or no) credit to boost their credit scores by demonstrating a history or responsible borrowing and repayment.
These cards offer low credit limits to prevent excessive or untamed spending that damages your credit score. They give you access to a limited amount of credit and the chance to establish a record of repaying on time. Regular payments will be recorded on your credit record, providing evidence to future lenders of your reliability and boosting your credit score.
Credit-building credit cards tend to charge higher interest rates than regular credit cards, although some will reduce their rates in return for regular, timely payments. We recommend using them until you’ve been able to boost your credit score a little, and then cancelling them in favour of other (more favourable) borrowing methods.
Step 3: Alternatively, get a credit-building prepaid card
A pre-paid card is a great alternative to the credit-building credit card – and works off the same principle: you borrow a small amount of money and repay it regularly to boost your credit score.
How do they work?
You borrow a very small amount – usually less than £100 – and agree to repay it by making regular instalments of minimal amounts (usually around £5). You sign a credit agreement and – once you’ve maintained your repayments (and made them all on time) you’ll boost your credit score that little bit more. Of course, interest fees are charged on your borrowing, so shop around to find a competitive deal.
Step 4: Consider a guarantor loan
If you’ve got a bad credit rating, a guarantor loan can be a great way to borrow money and boost your credit score at the same time.
Not sure what a guarantor loan is? Here’s a post that goes into a lot of detail – but the short answer is: a loan that is guaranteed by another person agreeing to make your repayments if you miss them or can’t afford them.
Guarantor loans make it much more likely that you’ll be accepted to borrow money and – because repaying monthly payments on time can help steadily boost your credit score – its also more likely that you’ll be approved for a standard unsecured personal loan or credit card in the future.
Step 5: Set up an overdraft
If you’ve got a current account but don’t have an overdraft, head down to your local bank and set one up – even if it’s only for a small buffer of £100. Now, this tip won’t boost your credit score at all – but it is damage control. It’ll give you a little buffer to make payments if you’re paid late or have any money problems.
Of course, it’s not a long-term solution – but the overdraft stops you from missing payments and getting negative ratings on your credit report. And, as attention and weight are given to recent repayment history, you could boost your credit score by demonstrating that you’ve learnt how to make regular repayments and manage your money sensibly.
If you’re looking for more advice on boosting your credit score, head over the Credit Rating section of our blog – it’s packed to the rafters with advice, information and even more tips to help build and maintain a healthy credit score.
- Author The Bamboo Team
- Posted 6 February 2018