Four Easy Steps for Repairing Your Credit after Financial Ruin

Saturday, June 10, 2017


£13,200. That is the amount of unsecured debt the average British household is saddled with according to a recent article in The Telegraph. The Insolvency Service recently reported that there are more than 130,000 bankruptcies, debt relief orders, and individual voluntary agreements each year in England and Wales, and that number just keeps rising.If you are coming back from financial ruin, you are not alone. Fortunately, there are steps you can take to repair your credit:

1. Apply for a Mobile Phone Contract
One of the first steps to rebuilding credit and a low-risk method for those who have trouble with debt is to sign up for a mobile phone contract. We recommend choosing a low-cost, bare-bones plan that will be easy for you to pay off on time. And, that is the key: pay on time. This will show the credit reporting agencies that you are capable of making regular payments, and thus, your credit score will improve.

2. Apply for a Credit Card
Once you are comfortable making regular payments on your phone, you can take the next step of applying for a credit card. If you have a poor credit history, the chances are you will only be able to get cards with low limits and high-interest rates. That is okay. You aren’t looking to make any big-time purchases at this time, and you must pay off the balance of your card each month. This way you will avoid the interest and show that you can handle debt.

3. Take out a Personal Loan
Over time, you will be able to talk to your bank about taking out a personal loan. Take out a substantial yet manageable loan, perhaps for an affordable used auto. You want to be sure that you can make the payment on time every time. Pay off the loan as quickly as you can. Again, this will show that you are able to be responsible with debt.

4. Wait
According to Experian, the UK’s largest credit reference agency, a bankruptcy order will appear on your credit file for at least six years. So, no matter what steps you take, there will likely be a bit of waiting involved with coming back from your financial disaster. However, if you follow the above steps and stick to making your payments on time, you will be in great shape once your financial downfall disappears from your record.

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