by Lina Martinez

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Your credit score is your license to spend. A bad credit score can stop you from being able to make many purchases that may be in instalments. This could include anything from applying to a car loan to taking out a phone contract. Many landlords are now doing credit checks on tenants. Some employers may even do credit checks on applicants before hiring them. Credit checks are becoming more common and as a result it’s becoming more important to keep a good credit score. But what can lead to a bad credit score? Here are just a few factors and what you can do to put them right.

Not paying creditors on time

The easiest way of damaging your credit score is falling behind on regular payments. This could include falling behind on rent or failing to pay bills on time.

To help rebuild your score, you need to prove that you can make payments on time. This might involve several years of never missing a payment. Alternatively, you can take out a credit-builder loan. This may last only a few months – succeed at making each payment and your bank will put a good word in to any future creditors whenever you have a credit check.

Having too many debts

If you’ve already got lots of debts, many creditors – especially lenders of loans – will think twice before taking you on. Even if you’re consistently paying off all your debts, new lenders may feel you already have too much debt to deal with.

There are several solutions. You could target payday loan lenders that don’t care about your credit score – these lenders will charge more interest however, so this isn’t an ideal strategy. Another option could be to take out a debt consolidation loan which pays off all your debts so that you only have one monthly instalment to pay off – this might suggest to creditors you have more control over you finances. Perhaps the best strategy of them all however is to take steps to clear as much debt as you can. If you’re in serious debt, it may be a case of getting debt help, which could include options such as negotiating with creditors and coming up with a debt settlement. If you’ve got lots of debts, but none of them are too severe, focusing on paying off some of these with any money you can. Don’t just meet the minimum monthly debt payments – throw some extra money at each debt to pay them off faster. You’ll save money in the end by paying less interest.

Having no credit history

If you’ve never been in debt or never had to pay bills, creditors might not know if you’re a trustworthy spender or not. This can lower you credit score and narrow your spending opportunities. It’s common for young people to face this when taking out their first loan or moving into their first property.

The only solution here is to start spending. You could consider taking out a zero interest credit card and buying a few small things on it. Once you’ve paid your credit card bill you can get rid of the credit card if you no longer want it. You’ll now have a credit history, and your credit score will be good because you’ve shown you can pay money back on time. Taking out phone contracts and subscriptions might also help to build a score.

Not being on the electoral register

When you have a credit check, your private details are usually compared to your electoral register details. If you’re not on the electoral register to begin with, this might be preventing people from carrying out a thorough credit check leading to you getting rejected.

You can sign up to the electoral register online. Just because you’re on the register doesn’t mean you have to vote.

Having different accounts linked to different names and addresses

Part of a credit check is making sure that you are who you say you are. Several things can suggest signs of fraud such as having two accounts registered to different addresses, or having one account registered to a maiden name when another is registered to your new name. These incorrect details are likely to be the result of forgetting to change them, but creditors may see it otherwise.

Simply go into your bank or sign up online and make sure that all your accounts and cards are registered in the same name and to the same address.