In the current financial climate, with banks cutting back on lending and price hikes making borrowing money a crucial way of staying afloat, having a bad credit rating can affect you far more negatively than ever before.

Credit checks are required in order to take out a loan, secure a mortgage and even to take out a mobile phone contract. A credit check tells lenders your credit history, and helps them to make a decision on whether you are an attractive prospect to lend to, ultimately making up their mind about giving you credit.

A number of things can affect your credit rating. The most serious is defaulting on a loan or credit card, which makes you an undesirable customer for a number of years, but many little things can drag your credit rating down. Late payments on credit cards or loans, missing repayments and even unsuccessfully applying for credit one too many times can leave a mark on your credit rating, making it difficult to get credit later in life.

Find out what your credit score is

You can find out how your credit rating stands by applying for a credit report, who, for a fee, will send you your full credit report, which lists all of your credit activity and gives you an idea of where you

Ways to improve your credit score

Should your credit rating not be looking as healthy as you might like, there are a number of ways that you can begin to rebuild your credit report.

Bad credit history credit cards

Offered exclusively to high risk customers with bad credit ratings, these bad credit-credit cards give customers a chance to prove that they are capable of responsible borrowing.

Giving small amounts of credit with clear repayment terms, spending little and often on a bad credit credit card, and then repaying the full amount (or at least over the minimum) every month, will start to rebuild your credit report and prove that you can make repayments in a timely fashion.

The most important thing with this option is to ensure that you never spend more than you can afford to pay back, and stay as far from the credit limit as possible. These cards are exclusively designed to help customers rebuild their credit history and should not be looked at as a form of ‘free money’, or used to get further into debt.

Check your credit history for discrepancies

Once you have obtained you credit report you should go over it carefully to make sure that everything makes sense to you.

Mistakes can be made, and with so few customers checking in on their credit histories you may find that you have been marked down for a loan you haven’t applied for, a repayment noted as missed when it was made in full and on time and so on.

Correcting these mistakes is relatively simple and will require you to contact both the lender involved and Experian/Equifax directly. Just one negative mistake on your credit report can drag your overall score down, so it is worth getting these mistakes rectified.

Keep up to date with current borrowings

It is never to late to start repairing a bad credit rating, so if you still have debt with companies, even ones who have led to a bad mark on your credit report, try to keep up to date with them straight away. If the problem is that you are still struggling with debt, you will find that a lot of companies are very understanding if you call them to explain the problem. You may be able to work out different dates or smaller repayments to bring you up to date.

Even if it takes longer to pay off your debt, as long as you are keeping within the limits of your credit agreement, regular repayments of debt can be used to start to improve your credit score. Try to see any current debt as an opportunity rather than a hindrance.

Stop applying for credit

Every application for credit is noted on your credit score, and affects your rating negatively if you are rejected. If you have applied for a loan and been rejected it is worth getting your credit report and finding out why rather than applying for a loan with a new company.

If you need a quick loan, and are in the position to pay it back in full, then payday loans do not require a credit check and can be deposited into your account within 24 hours.

If you do need to take out a loan from a payday loans company, make sure that you are able to pay this back in full under the repayment terms (be they 30 days, 60 days or 120 days) and use this as an opportunity to relearn how to deal with debt. Improving your mindset about borrowing can quickly lead to improving your financial situation overall!

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Warning: Late repayment can cause you serious money problems. For help, go to