In the early 2000s, credit offers were everywhere: you could barely open your front door for all the offers of credit piling up on your doormat.  All the adverts on TV were for loans and credit cards, and all assured you that you’d be given credit even if you had CCJs (County Court Judgements – usually made when a person gets into bad credit  they can’t afford to repay), poor credit rating or low income. 

Then a couple of years later, in 2008 or so, the junk mail and adverts were no longer offering credit – they were

offering ways out of debt such as Individual Voluntary Arrangements (IVAs) or bankruptcy.   Numerous agencies, both governmental and profit-making, were set up to counsel people through their debt problems.  Record numbers of repossessions and insolvencies later, things have stabilised a little now and there are plenty of people who are able to sign up for credit cards and there is a lot of call for online sites to use to compare credit cards for people to get the best deals.

But as time has passed, few people take debt as lightly as they did perhaps ten years ago – we know it’s a serious business that can cost us a lot more than a bit of interest.   And if you’re left with a poor credit rating, then what does this mean and what can you do about it?

Credit ratings affect many areas of your life, from being able to sign up for credit cards and store cards, to buying a house or taking out a loan.  When you compare credit cards you’ll see that some offer low APRs or even zero APRs (low or zero interest rates) to attract business – but these are normally only actually available to people with a good credit rating.  If you have a poor credit rating then if you’re able to get a credit card at all you’ll probably be given a high APR with it. 

That may seem disingenuous – why charge more to the people who are least likely to be able to pay?  But credit card companies run for profit and want to protect their business and if someone is likely to default on their debt then they want to discourage further borrowing until that debt is repaid. 

You can find out your credit rating online (many companies offer a free report, though be careful to ensure that you sign out from the service after the initial free period or risk having to pay an annual fee).  Sometimes a poor credit rating is down to a mistake – perhaps the person who last lived at your address had a low credit rating and your address flags up warning signs on credit checks.  It is possible to disassociate yourself from a debt like that, so it’s worth checking whether that’s what’s happened to damage your credit rating

You are deemed to have a high credit rating if your score is over 700; if it is below 620 then you are deemed to have a poor credit rating.  Go through your credit rating report with a fine tooth comb to check for any inaccuracies, and to make sure that anything older than 7 years is  removed from your credit history. 

To improve your credit rating, always pay your bills on time (use direct debits for regular bills, which will mean you won’t ever forget a payment) and pay off any debts as quickly as you can by paying more than the minimum.  It will take time to improve your credit rating – but if you’re in a lot of debt then perhaps the last thing you need is easy access to yet more debt.