Finance Roll

1. Sign up to a credit reference agency

If you are getting multiple fines for missed payments, and getting several phone calls from your creditors per month, you need to find out exactly why. The most popular credit reference agencies are Experian and Equifax, and your report can be ordered for a small fee.

2. Request 6 months' worth of statements from your bank and creditors

Many people with bad credit ratings tend to avoid looking at statements, and sitting down with a historical account of your spending activity is the most effective way to identify where you are overspending and can help identify excessive spending trends.

3. Prioritise paying off CCJs (court judgements)

A County Court Judgement (CCJ) is one of the most crippling additions to a credit file, and implies that the person with a CCJ has ignored repeated requests to pay off debts. Paying a CCJ off as quickly as possible is a surefire means to improve a bad credit rating.

4. Stop applying for more credit and cut up your store cards

This may seem like an obvious point, but many people with serious debt problems continue to obtain more credit. They continue to apply even if they've been refused elsewhere, and each time they do this their credit score is weakened as they are considered a liability. If you have store cards, cut them up and pay them off immediately. Unlike credit cards, store cards cannot be used as a source of emergency cashflow, and the mentality associated with them is more about "treating yourself" rather than being responsible with your credit.

5. Pay at least 70% off all of your credit cards

Running maxed out credit and store cards and making the minimum payment each indicates a lack of trust in your ability to manage your debts. Ideally, if you have a £1000 credit card you would never want to exceed £300 credit. Concentrate on paying off at as much of your cards as possible, keep your cards below 30% of their maximum and your credit rating will improve.

6. Keep your credit cards open

Once you've paid off your credit cards, don't close them. To maintain a good credit rating you need to continue borrowing. Once you have resolved the issue of running maxed out credit cards and have paid at least 70% off each card, continue to borrow small amounts and pay it back each month.

7. Move all of your direct debits to within the first week of getting paid

Unless you specifically request a date, direct debits can be staggered through the month, and it's easy to get stung by a direct debit that comes out a few days before payday. Phone bills and utility bills also influence your credit rating, so ensuring that they all come out when there's money in your account will help prevent missed payments, which can quickly destroy a decent credit rating.

8. Get a landline phone and get on the electoral roll

This is a strange point, but landlines and registering for the electoral roll gives your credit file a static and trusted address, which can positively influence your credit score.

9. Further down the line, set up a savings account

Whilst it'd be too much to ask to start saving if you already have a bad credit history, by making steady monthly payments into a savings account you are showing creditors that you are responsible with your earnings, which of course looks good on your record.

10. Don't be afraid to seek help

There are dedicated charitable companies designed to provide assistance and guidance with regard to bad credit repair. Don't be shy! Such advisors work with thousands of people a year in the same situation as yourself, and can often prescribe good, common sense advice that you may not have thought of.