What to do if you have a bad credit rating

In an economic climate where banks and mortgage lenders are inclined to be ultra-cautious, any negative content on your credit rating can result in an immediate refusal. Cleaning up a bad credit rating can be an arduous and involved process, but it is worth making the effort.

First identify exactly why you have a bad credit rating by getting a detailed credit report file from credit rating agencies Experian (www.experian.co.uk) or Equifax (www.equifax.co.uk) This will cost £2 but it will enable you to see the defaults placed on your file by banks or companies. It is necessary to have this information before you can take any steps to clean up your bad credit record.

Once you have seen your credit file, check it for accuracy. If you disagree with anything, write to the agency and request it be changed. The agency may change the file, although it is more likely to ask that you contact the company that originally filed the default or bad credit report. In the meantime you can add your own comments in a notice of correction.

If you believe a company has filed an unfair report, write to them directly and politely ask them to check and rescind their report. If this has no result, you have the option of referring a complaint to the Information Commissioner's Office (www.ico.gov.uk) to pursue your complaint.

Don't underestimate the importance of building up positive credit reports. This can involve some very simple actions. Make sure you are on the electoral roll,  never miss payments on utilities or phone bills, get a telephone landline, update or cancel old accounts and make a concerted effort to reduce your debts. This won't immediately repair a bad credit rating, but it will make gradual improvements.



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