‘Good’ or ‘excellent’ credit score ratings can help you get the best mortgage and loan deals, rent places to live, and take out better credit cards. 
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There are lots of tips on how to boost and maintain your credit scores. But what if you need to rebuild credit scores that are already ‘bad’? ‍

‍Loqbox looks at 7 ways to rebuild credit and get your score back on track.

What’s a bad credit score?

‍Your credit scores are numerical values given to you by the top three credit reference agencies (CRAs) in the UK: Experian, Equifax, and TransUnion. Each score is based on your credit report and gives you an idea of your creditworthiness to potential lenders.
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Each credit reference agency generates credit scores using a different method, but you can find their ranges on this table:  

Higher credit scores are more likely to get the best deals, whereas lower scores may struggle to be accepted for some loans and mortgages, or may get less favourable interest rates.

When looking at your Equifax credit report’s data, a credit score below 439 is considered to be in their ‘Poor’ category. Whereas Experian marks their lowest band at 0-560 as ‘Very Poor’, TransUnion’s uses the same wording for points falling between 0-550.

Why should I rebuild my credit score?

‍If you have a bad credit score you might find that you struggle to get accepted for certain lines of credit. And even if you are accepted, there’s a chance that you will be required to pay higher interest rates than people with ‘good’ or ‘excellent’ credit scores.
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‍When it comes to large loans like mortgages, getting the best interest rates can save you £1,000s in the future. Getting the best financial deals available is an important part of achieving and maintaining financial wellbeing. So, what can you do about it? Loqbox has 7 useful and effective steps to rebuild credit scores.

7 ways to rebuild your credit score

1. Get to know your credit reports and credit scores

It might seem obvious, but checking and keeping an eye on your credit report and your credit scores is a great place to start if you want to rebuild your credit. Understanding your credit report, and the things that impact your credit score, can help you prioritise your finances. You can find out more about credit scores and what effects them here.
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‍Your credit reports are held by the three main credit reference agencies who generate your credit scores. The main ones in the UK are Experian, Equifax, and TransUnion. You can check your statutory credit reports through the agencies directly. But statutory reports don’t show your credit score, so you can also check both of those  for free, as often as you’d like to, and without impacting them, using these services: 
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ClearScore (uses Equifax data)*

Experian App (uses Experian data)

‍Intuit Credit Karma (uses TransUnion data)

*For transparency, we wanted to let you know that ClearScore pay us a small commission if you sign up using this link.

2. Correct errors on your credit report

While you’re getting familiar with your three credit reports, check for any errors or mistakes.

It’s possible to have incorrect markers on your account: a record of a missed payment that you never missed, or an ex-partner still linked to your report whose bad credit history is negatively affecting yours. Mistakes happen and they can really hurt your credit score.
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Credit report errors can be removed by the credit reference agencies directly (or they may ask you to flag it with the lender you use if they are reporting incorrect data). Experian, Equifax and TransUnion each hold a different credit report for you, so mistakes on one might not show on another. So clearing errors with one won’t necessarily solve all issues. Markers on reports can have a big impact on your credit score so fixing them is important if you want to rebuild and restore credit scores.‍

‍You can find out more about fixing errors on your credit report here.

3. Check your credit utilisation ratio

One of the things that credit reference agencies look at when generating your credit score is your credit utilisation ratio (or rate). Simply put, this is how much of your available credit you’re using. So if you have used £1,000 of a £2,000 credit limit, your credit utilisation ratio is 50%. Generally, you should aim for a credit utilisation ratio of less than 25%.

Having available credit on your account suggests you’re more financially stable. If you’re constantly living at your credit limit it could be a sign that you’re irresponsible with money and a lender may deem you as ‘higher risk’. Your credit score will reflect that. 
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Work out your total debt, divide it by your total available credit and multiple the result by 100. That’s your credit utilisation ratio.

4. Use credit responsibly

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‍One of the most effective ways to rebuild your credit is to use credit (responsibly). You may think that avoiding credit completely would help you heal your credit score because you’re showing you don’t need it.

But the perfect customer for a lender is, of course, a profitable one. That means you use credit regularly and always make your payments.‍
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‍So you should definitely use credit if you want to rebuild your score. But it is important to be realistic about what you can afford. Shiny new credit accounts can be tempting — but as much as using credit can do wonders for your credit score — misusing it can have a dramatically opposite effect. 
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If you’re starting off on your journey to rebuild your credit score and you’re unhappy with the current score, there’s a chance that you have missed payments, defaults or a County Court Judgment in the past. You may even be nervous to use a credit card because of previous issues that caused it to drop in the first place. 
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If you're starting from scratch or have limited credit history, it's important to build a positive payment history (aka. your credit history).

If you don’t feel comfortable taking out a credit-building credit card, there are simple to use alternatives that can still build up your credit history — like Loqbox Rent — if you pay rent, you can also use those regular payments to help give your credit history a lift. 
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It doesn’t matter whether you pay rent to a landlord or to your parents, you can connect your bank account and let us know how much you pay and when, and we will report your payments to Experian to help build your credit history.

If you do have a credit- building credit card already and you’re using it with the aim to rebuild your credit, be sure to at least hit your minimum payments and be mindful of high interest rates that usually come with these ‘high risk’ products.
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‍Make small purchases and pay off the balance in full each month. Show responsible credit utilisation and start to grow a positive credit history.

5. Don’t apply for too much credit

While you might be tempted to rush out and start boosting your credit score by using credit, it’s important not to make too many credit applications in a short space of time.

Multiple credit applications in a row can temporarily lower your score as your report could show lots of hard credit checks. You can read more about soft vs hard credit checks here.
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The reason to avoid multiple credit checks is because it shows financial desperation (and maybe some sort of money problem that you have). Try to spread out these hard credit checks and new accounts by once every six months. And while you’re waiting, focus on improving your creditworthiness by responsibly managing your existing credit accounts.

6. Register to vote

OK, this is an easy one. Did you know that registering to vote and getting your name on the electoral roll can help to rebuild your credit score? The electoral roll is what the credit reference agencies and lenders use to prove you are who you say you are on your applications. So, if your name is listed (and ideally at a stable address), it can help to give your credit score a boost.

‍If you’re not sure if you’re on the electoral roll, or if you want to register, it’s really simple. You can register to vote here.

If you are not eligible to register yourself on the electoral roll, you can still help to prove your identity by asking Experian, Equifax and TransUnion to add a ‘Notice of Correction’ to your credit reports, explaining why you can’t register.

7. Get started with Loqbox

‍If you’re looking for the fastest way to rebuild credit, get started with Loqbox Grow for just £2.50 per week. It’s an interest-free credit account that grows your credit score just by using it. You could see a boost of 125 points on average in the first six months (and up to 300 points in three months by using it with our other great credit-building tools).

Improvements to your credit score are not guaranteed. Your own circumstances and financial behaviours will affect this too, but you don’t have to be alone on your journey to rebuilding your credit (which can be long and a challenge to navigate). So we’ve put together these golden rules of credit building for you to put your best foot forward from here. 

How long does it take to restore credit scores?

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‍Turning a ‘bad’ credit score into a ‘good’ or ‘excellent’ credit score takes a fair bit of time and effort. There’s lots that you need to sort out and you will need to stick to your plans. It can also take a while for Experian, Equifax and TransUnion to update your credit report when changes have been made, so rebuilding a credit score quickly can be a frustrating mission.

‍However, while it isn’t a quick process, it’s important to rebuild your credit if it’s ‘poor’ so that you can get the best deals for your credit applications in the future. So, how long can you expect to wait? Well, unfortunately, there’s no set timescale. First, it will depend on how you manage your money and how quickly you can resolve any errors on your report.

If you have faced challenges with having missed payments, defaults or County Court Judgments, then those will stay on your credit reports for six years. But if that is worrying you, try not to feel disheartened — these matter less as time moves on — and what will matter to a lender in the future is the evidence of good financial behaviour you’ve shown since then.

‍It can also take up to a few weeks for changes to appear on your credit report. And it can take as many as six months for the credit reference agencies to update your score after positive activity starts to show on your credit history. Depending on how negative the markers on your credit report are, it could take longer.

How about rebuilding credit after bankruptcy?

Rebuilding credit after bankruptcy is hard but it’s possible. Generally, you’ll be discharged (or released) from bankruptcy after 12 months. At this stage, unfortunately, it will probably take years for your credit score to improve to ‘good’. Bankruptcy markers stay on your credit report for six years.
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But once the bankruptcy marker lifts your credit score will show a big improvement! In the meantime we’d suggest that you follow the above steps where you can (it may be difficult to get a credit card, but Loqbox could help instead!), so that you’re in the best possible shape when the bankruptcy marker ends you can capitalise on the good credit history you’ve built in the meantime. 

So, can you really rebuild credit?

‍Yes, absolutely! Consistency and responsible money management are key to making it work.

Try to stay focused and be patient. With determination and the right approach, you can rebuild your credit and improve your financial opportunities and wellbeing. And remember, the best way to rebuild your credit fast is to start today!