How to boost your credit score when in debt

How I boosted my zero-rated credit score.

Why I had to boost my awful credit score, and how I did it

In 2017, the business I'd grown from a small side hustle to a multi-million pound business collapsed due to changes in EU (food) import laws and supplier agreements. These changes meant we could no longer sell the products that made us so successful, destroying the business.

I poured all of my personal money into the business in an effort to keep it going and also took out credit with a personal guarantee to help keep us trading, which was a bad move for me, as it turned out!

The business wasn't salvageable, and needless to say, creditors wanted their money. With vast amounts of debts hanging over my head, which I was obliged to pay, and no money to pay them, my only option was to declare bankruptcy.

Declaring bankruptcy cleared my debts, but it crippled my credit score and meant I was living without any option of credit for some time, and living without credit, can make paying your bills, feeding your family, and even getting things such as car insurance, very challenging indeed.

Bankruptcy stays on your credit file for six years in total, and affects you for the majority of that time. The further you get into your six-year 'bankruptcy sentence', the easier it becomes to be able to get at least some credit, albeit only small amounts, compared to what you might have been used to in the past.

The key to my eventually going from a zero credit score to around 500 out of 999, during my six-year bankruptcy period, was being savvy about how credit works and how to boost my credit rating, which in turn may well lower your credit costs and get you more and better credit options.

It'll always be hard to boost your credit rating much when bankrupt, but once you're out of that six-year period, using a few fail-safe techniques to maximise your creditworthiness helped me go from 500 to a 987 score, as it is today.

Hopefully, you're not at the same low level of credit rating as I was; heck, you couldn't be lower than my score of zero, and if you are, I'm hoping my tips below will help you to climb that credit ladder. Nothing is instant with credit, so don't expect miracles, but it will work; you just have to be patient!

My tried and tested tips for climbing the credit score ladder when in debt.

1. Use eligibility calculators before applying for credit cards or loans to avoid negative credit impacts.

Applying for credit cards or loans without checking your eligibility can hurt your credit score. Here’s how eligibility calculators help you make smarter decisions. Every application triggers a hard inquiry on your credit report. Too many inquiries can lower your score as lenders don't like to see lots of credit checks, it makes them nervous, and it'll mean you may be declined for a credit product. If you want to apply for a credit card or loan, always use an eligibility calculator.

If you go to a credit card company or a personal loan company and just apply for a product, those applications are classed as hard searches that appear on your credit file, possibly affecting your credit score negatively, as too many hard searches in a short span can be detrimental, because too many inquiries over a short period of time can lower your score as credit card issuers don't like to see lots of credit checks, it makes them nervous about potential credit card debt being racked up, and it'll mean you may be declined for a credit product.

Credit applications stay on your credit file for one year; so they are there for a considerable amount of time! An eligibility calculator, however, uses a soft search, which doesn’t affect your score, and helps you identify the best credit card options.

It will guide you towards offers that you are more likely to be accepted for. As an example, you might apply for a new credit card with a £5000 limit, when in fact your credit score means you're only likely to receive offers of around £500, and the calculators will show you offers that match your credit profile and so won't mark your credit file with declined applications and saves you time applying for things you may not get, and also stress, as there's nothing worse than being rejected for credit, its really demorolising!

2. Be consistent on credit applications

Ensure you give consistent information across all your financial applications for personal information, such as your job title and mobile number. This stability is crucial as lenders look for consistency to avoid fraud scoring, which can jeopardise your chances. If your details haven't changed, stick to the same job titles, such as office worker, courier, warehouse worker etc; don't change your role to something else such as warehouse operative or warehouse manager, as it can cause you issues; if unsure see what your work contract states your job title is and stick to it!

Also make sure the information you add is accurate; if you're divorced, say divorced, not single; if you're not married but living with someone, don't say married, say living with partner; the lenders want consistency and factual statements, they do check on certain aspects, so save the hassle and be totally accurate about what you state, each and every time!

3. Get on the electoral roll!

While some people avoid this due to direct marketing concerns, it remains a key factor for credit scoring, so make sure you are registered to vote. I know my daughter's credit score rocketed when she registered to vote, and I'm sure you're will too! If you are a foreign national without voting rights, you can benefit by adding a notice of correction to your credit file. (This is a brief statement you can add to your credit report to explain specific circumstances that may have affected your credit history. It allows you to provide context for lenders or creditors who review your report, providing evidence of permanent residence, and this will help improve your credit rating.

4. Be cautious with joint financial products as they link credit files with others.

Issues can arise if you're sharing financial links with someone. Simply marrying or moving in with someone doesn’t link you financially, but joint accounts or loans do. If you sever financial ties with someone, especially post-divorce, ensure to file a notice of disassociation with credit agencies to delink your records, and this tells them you are no longer associated with that person and so they shouldn't be mentioned on your credit file. When I got divorced, my wife did this to remove me from her financial records, which was probably wise, being I was so in debt, but I noticed the other day she was still showing on my reports, so I need to remove her.

Also, incorrect links on credit files with family members, such as a brother or sister, (twins can be an issue!), or even child that doesn't live with you anymore and so shouldn't be on your report, should also be resolved with a notice of disassociation, which sounds harsh towards a family member, but can help you build a strong credit score!

5. Renting?

Having a mortgage or secured loan can give you a higher credit score. Paying back a secured loan like a mortgage is one of the best ways to show/prove to other potential lenders that you're a reliable borrower, making regular monthly payments and likely to be a good customer, and therefore you'll probably get some good offers/deals, such as lower interest rates or a credit limit increase. What if you rent, though? Rental payments are not counted towards your credit score automatically.

This is because a mortgage is a credit product; it's a loan at the end of the day, so like all loans, your payment history is reported to the credit agencies. Rent is not a credit product, it's an agreement to pay a fee for rental of a property, and so isn't classed as a loan, and so, even though what you regularly pay for your landlord could be more than you'd pay for a mortgage, which shows an ability for you to pay a mortgage, its not counted by credit agencies, which ids a kick in the teeth for renters, (such as myself!).

However, there is an app called Credit Ladder and they offer your he facility to link their app top your banking app, and this will then be able to determine when you pay your rent and it will send that data to one credit agency for free, which the credit agency can use as a positive on your credit score.

They also offer an £8 a month or £60 a year option, where they'll report your payments to Experian, Equifax, TransUnion, and Crediva. This can be really useful if you are trying to show a lender a positive payment history when trying to get on the housing ladder.

6. Never be late on repayments & set up direct debits to cover minimum payments.

Late payments are a really negative thing to find on your credit file. Even a missed payment on a 0% interest credit card account can negatively impact your credit score. Those missed payments are all noted by the credit reporting app, and they'll have an adverse effect on your payment history for months, possibly years!

Therefore, set up direct debits to cover minimum payments if necessary, as at least then you'll never miss a payment date, and it reduces the risk of a black mark on your credit file, which really impacts your building a good credit score; you really need to keep exisiuting credit accounts in good standing.

Needless to say, try to make the minimum payments and manually overpay when possible to get your balance paid off earlier. Credit agencies like to see this, and it'll reduce the amount of interest you'll end up paying on your credit.

Also, don't use your credit card to withdraw cash from a cashpoint; it'll cost you a bomb in fees. Credit lenders often view this sort of credit usage unfavourably, as it implies poor money management on your part, so avoid it like the plague!

7. Check your credit report regularly!

Your credit report is the core part of your credit score, and any errors or outdated information on the report can really affect your score. So use FREE credit score services such as Experian, Transunion, Clearscore, or Money Saving Expert's Credit Club to get regular updates and easy access to see what is impacting your score.

Most credit services have free options, so you won't have to pay to check your credit score, but if you want more detailed information or want to be totally on top of your score and any changes, as I did, it can be worth signing up for a paid version.

I used the Experian Credit Expert programme, which is £14.99 a month (it offers a 30-day free trial). This programme gave me extra information, which I found to be really useful. It is worth investing in should you want that higher level of credit transparency. If you are going to sign up, check to see if the cashback site Topcashback is offering cashback on a paid Experian service; it often is and helps reduce the cost of being a paid member.

Hopefully, these tips will help you manage your credit. There's lots of advice out there about credit scores and debt, and it's all valid, but I just wanted to add my personal tips on the subject, having been on the wrong side of a good credit score. I think it's important to get genuine information from someone who's been through the credit wringer and come out the other side!

No matter if you have bad credit, a short length of credit history, horrendous credit card bills, or perhaps your just starting out on your credit journey and being with higher interest rates, or not getting offered the types of credit options you were hoping for or the amount of credit youw wanted; perhaps you're simply looking at building credit or looking to switch or to combine all your debt into one account, to reduces things like your minimum payment you make per month for your credit, my tips should help you with what you want to do.

It all takes time; there is no fast pass for boosting your credit score in just a short time. You're in for the long haul, but make sure you learn from your credit journey like I did.

Having been through those tough few years, and now having come out the other side with a decent credit score, I'm being barraged with offers for transferring credit card balances, installment loans, car loan offers, a new card with much higher limits, and I would have jumped at the chance when I initially went bankrupt, but now I do my utmost to avoid using my credit card unless its an emergency, I don't take out loans, other than for a new phone if really needed, and enjoy not having that debt hanging over my head!

I might use my credit card once a month, but that's usually to make sure I buy something small that I'll pay off immediately my bill arrives, in full, as that shows the credit card companies that I'm a sensible spender and am using my best practices to keep my spending well within my total available credit, and not spending frivoiusly or opening lots of new accounts, and that should help maintain my higher score going forward, and it'll help you too.

If you are in debt and need advice, (I can't give legal advice obviously, only my experience as a guide!), then reach out to other following organisations who offer FREE advice, (don't pay for advice!), and remember that debt is temporary; its all-consuming, and super stressful at the time, but it doesn't last forever and will get better, no matter how bleak and hopeless it might feel, trust me, I've been there and I know.