How to improve credit rating

Niknak83

My credit rating is hovering at the low end of ‘fair’ and I’m struggling to increase it. I have debts, which I have been steadily paying down for the last couple of years using the snowball method. It will probably take another couple of years to be debt free. I’ve never missed a payment. I’ve also stopped using all credit cards for a couple of years. 

Is there any way to increase my credit rating other than continuing to pay down the debt? I’m on the electoral roll etc. Would it help if I started using a credit card again but paying off in full every month? I want to get a mortgage in the next year or so so I’m reluctant to take out any new debt or do anything that affects my chances of getting a mortgage.

molerat

With long standing outstanding debt that you are only paying down relatively slowly your rating, which is of little importance anyway, is unlikely to improve greatly until that debt has reduced or starts to be paid off at a greater rate. The rating is more to do with affordability to take on new debt than anything else and if you can't afford to pay down your existing debt more quickly your rating to take on more debt will not improve. Using a card regularly and paying off in full will likely make a small improvement though. 

sourcrates

Its difficult to give a "one solution fits all" answer here, as lenders all have their own specific lending criteria, which the general public is never privy too.

It really is the usual stuff, have a stable address history, pay on time, don`t borrow what you don`t need, using a credit card and paying off in full can`t hurt either, lots of utility companies now report to credit files, so as long as you have a good repayment history, and don`t overstretch yourself, then your doing as much as anyone can be expected to do.

Affordability is a big issue these days, it stems from the granting of payday loans to those who could never afford to repay them, its now filtered down to most types of borrowing, so if its a mortgage your after, a good deposit and the ability to repay is essential, there would be nothing stopping you getting a mortgage with some bad credit on your file, most folk just use a good broker, however the cheapest deals usually go to those with better credit histories.