How to start repairing your credit rating

It is not just a history of bad credit, late payments or missed payments which may prevent agencies and companies offering you loans and credit. If you have no credit history credit agencies have no way to judge your ability to repay a loan.

Use credit services to rebuild your credit score

Opening and paying off accounts can improve your credit rating. Even if you have a bad credit rating, including CCJs, you can still qualify for loans and cards.

They may not be the best or most attractive on the market but specialist credit cards and loans for people with bad credit ratings can be used to rebuild a credit history.

You can apply for the Capital One Classic Card if you're over 18, are registered to vote and have some history of managing your credit, even if you have had CCJs or defaults in the past. You may also qualify for a Vanquis Card if you have proof of address, are on the electoral role, are not bankrupt and you are over 18 years old.

Both these cards have high interest rates, usually around 30% - 50%, so should never be used for borrowing. To make them work for you and to improve your credit rating use them once or twice a month to pay for relatively low cost things, such as weekly shopping or filling up your car with petrol.

Most importantly, pay them off at least 2 weeks before payment is due. If you use these cards without incurring charges or penalties, it will help you to rebuild your credit rating.

How Payday Loans can improve your credit rating

Applying for a paydayloan is fast and easy, can be done online and you will know if your application has been accepted within 24 hours.

Qualifying for a payday loan is much easier than passing the criteria used by high street lenders. To get a paydayloan you must be over 18 years of age, live in the UK, have a job with a regular paycheque or salary and hold an active bank account that your salary is paid into.

Same day loan companies, like PaydayBank, pass on your information to lenders who credit check your application with credit reference agencies. When you have been approved for a loan this will be added to the information credit agencies hold about you.

On your payday, when you repay an existing payday loan, lenders will report that to the credit reference agency, so they will know you have repaid your loan. This will help rebuild your credit rating as it will show that you have taken a loan and repaid it in full and on time.

Payday Bank will pass your application on to no credit check payday loans services is you do not meet the criteria for other paydayloan companies. Make sure you only borrow what you can repay.

It is important to remember that late payments and missed payments have a negative impact on your credit rating. Contact your lender in advance if you think there may be a problem repaying your loan on your payday and they should be able to review your payment plan.

In this section

• What is a credit score

• How to start repairing your credit rating

• More steps to improve your credit rating