Whether it’s down to financial difficulty or mismanagement of bills, you may have accumulated a less-than-excellent credit rating over the years, which may have led to you being declined for a loan. However, don’t worry as, although it won’t happen overnight, there are many steps you can take to make a poor credit rating good or excellent.  

Here at Asda Money, we want to help you along the path to gain a better credit rating, so here are our top 10 tips on how to improve it for the future.

1. Pay your bills on time
One of the most obvious ways to improve your credit score is to always pay your bills on time. By doing this, you’ll prove to future lenders that you’re a reliable borrower, and that you’ll be able to make loan repayments on time too.

2. Register on the electoral role
Although it might sound strange, your credit rating actually improves if you’re on the electoral role. When you’re registered on the electoral role, it confirms where you live, so potential lenders know you’re a real person and not a fraudster.

3. Use credit cards responsibly
Many people think getting a credit card is a bad thing, however, if you use it correctly it can actually boost your credit score. In fact, never having had credit can count against you when applying for a loan. Taking out a credit card gives you the opportunity to prove to lenders that you’re a responsible borrower. The same rule applies to other forms of credit too, such as store cards and phone contracts.

4. Show that you’re stable
Lenders also like to know that you have a stable life. For example, you’ll sound more appealing to a lender if you’ve lived at the same address for a long time or worked for the same employer for several years.

5. Don’t apply for too many loans at once
One mistake that many borrowers tend to make is applying for a range of different loans to see which one they’ll get accepted for. Making several credit applications with lenders, using hard searches, within a short space of time can have an adverse effect on your credit score.

6. Think about your financial links
Before applying for any form of credit, make sure you’re no longer financially linked to someone you no longer share a joint account with. Living with somebody who has a poor credit score shouldn’t affect your credit rating but having joint financial products with them will.

7. Don’t withdraw cash on credit cards
Although using a credit card is good for your credit score, withdrawing cash from it sometimes doesn’t look great to lenders. It may give the impression that you don’t have enough money in your bank account for essentials, which will make it look like you’re not responsible with money.

8. Cancel unused credit or store cards
Whenever you’re finished with a credit or store card and don’t want to use it in the future, make sure you cancel it as soon as possible. Lenders can sometimes take into account the credit limits available to you, as well as your outstanding debts.

9. Stay up-to-date
Even if you don’t currently need your credit score for anything, it’s always best to check it every year to make sure it’s up-to-date. Any mistakes on your file could mean that you’ll get turned down for a loan, so be sure to raise any issues you might have if you think there’s a mistake.

10. Stay within the overdraft limit
Overdrafts are there for when times get tough, and there are many banks that now offer free overdrafts for up to a certain limit. However, if you do have an overdraft, make sure you don’t go over your agreed limit.

Find out more or apply for an Asda Personal Loan here. For more financial hints and tips read our other Asda Money Personal Loans guides.