How to Recover from a Poor (or Limited) Credit History

You may well have noticed your credit score rise appreciably in May, and this was due to a change in the way that agencies utilized new and existing public records.

More specifically, the three major credit agencies are now excluding all tax liens from their reports, with this decision triggering an immediate hike by as much as 30 points in some instances.

Still, there remain a number of citizens who continue to struggle with a poor credit history, while others annually earn less than they pay out in debts. There are a host of fair and bad credit products available in the current climate, each of which can offer you access to capital and lay the foundations for a positive credit score. 

Here we’ll look into if you can recover from a poor credit history or build on your score in instances where you’ve had limited transactions.

Review your Credit Report in Full

Often, we have preconceived ideas about the nature and the volume of our debts, but these are not always accurate.

Certain accounts may have accumulated considerable interest, for example, while other could be inaccurately recorded or have been removed from your report. Remember, accounts are removed from your records six years from the date that they defaulted, and this can provide an instant boost to your score.

With these points in mind, it’s crucial that you review your report in detail and commit to checking the information included on a regular basis.

This way, you can calculate the total amount of debt that you owe, prioritize key creditors and actively strive to remove any outdated accounts.

Pay Attention to the Smaller Details on your Report

On a similar note, a proactive approach and a keen eye for detail is also crucial if you’re to maintain the integrity and the accuracy of your report.

You should certainly pay attention to your address history, for example, as this should be completely accurate and entirely up-to-date. You must also be registered to vote at your address, otherwise lenders may be unwilling to extend you credit in the near-term.

If you’re address history or current details are inaccurate, we recommend that you contact the credit agencies in question and correct them as quickly as possible.

This should provide an instant boost to your score, while improving the chances of future credit applications been accepted.

Try to Create Positive Credit Transactions on your Report

If you’re score is low or you have a limited credit history, you’ll also need to spend some time repairing some of this damage.

This can be done by creating positive credit transactions on your file, ideally new or existing accounts that have a zero balance. Although this may seem counter-intuitive, it proves that you can be trusted with a line of credit by agencies and are therefore worth considering as a borrower.

Aside from using new or existing accounts with a zero balance, it’s important that you make small and recurring payments that can be easily repaid at the end of each month. This prevents you from accumulating interest, while it proves to lenders that you can manage and settle debt over a sustained period of time.