How to Rebuild a Poor Credit Rating Fast

If you have a poor credit rating, it can be challenging to know where to start to amend this. The best way to build a credit rating is to prove that you’re not a risky person to lend to. But then, if you have poor credit, you’re in a situation where it’s difficult to get even a basic card to begin to build this back up. If you have poor credit and are seen as ‘high-risk,’ then check out paymentcloud, which specializes in bank accounts for this type of business.

Use a specialist credit card.

The best way to rebuild your credit score if you either have no credit history or a poor credit rating due to missing payments on a credit card or loan is to pick a specialist credit-building credit cards. These are made especially for people that can’t get accepted onto any other credit card and can be used to rebuild your credit. These cards will often have very high interest rates to compensate for the perceived risk of lending to someone with poor or no credit history. This means that if you fail to pay back the borrowed amount in the allotted payment term, then you’ll have a significant additional amount to pay back. It’s recommended that you set up a direct debit to pay back any spending on these cards in full to make sure that you don’t miss a payment. Try to only put small payments on these cards and make them a priority to pay off, so that you don’t have any issues even if you don’t have that much cash on any particular month. 

Pay rent on time.

If you rent your house, then you can use this as proof of good credit. You can simply sign up to the Rental Exchange Initiative in the UK which is made for anyone that rents privately to have these tracked on your credit history. If you then pay your rent in full every month, this will help to boost your credit. If you think that there’s a chance you may miss a payment, then think again about applying for this, as it will be marked down on your file as a negative.

Avoid payday loans.

Payday loan providers sometimes suggest that if you make payments on time, then this can help your credit score. In reality, though, choosing a credit card is a much cheaper and safer option, and if you go to apply for a mortgage, you’ll likely find that you’re immediately rejected as this is a big red flag for lenders.

Show stability.

In general, people that are employed and own their house are accepted for credit more often than those that are self-employed and rent. This is because these people are perceived to be more stable – if you are employed you have a stable form of income, and if you own your house, you’ve shown that you’re able to save and successfully buy a property. Try to make sure that the address you use when applying for any loans or finance is consistent to show stability.

Adam Hansen

Adam is a part time journalist, entrepreneur, investor and father.