Boost Your Credit Score in Addiction Recovery
It can be very important to boost your credit score. Maintaining a high score allows you access to a lot more financial products and lending opportunities. It can also help you to prove financial competence and get good deals.
If you want to get a car on finance, take out a loan, use a credit card, get a mortgage or rent a flat, or simply take out a new phone contract, you will need a good credit score.
However, it can be hard to maintain a good credit score during addiction and recovery. Your agency is often eroded through addiction and with it often your financial control.
If you default on payments or suffer any kind of hardship, your credit profile will be negatively impacted.
However, it’s actually not that hard for most people to boost their credit score.
How to boost your credit score
There are a great many ways in which you can lift your credit health and ensure your long-term financial capability. These run from simply staying informed about what is going on with your credit profile all the way up to active steps you can take to boost your credit score.
Keep track of things as you boost your credit score
I would encourage anybody to get a hold of a recent credit report. You can check it for free using a variety of resources, including:
MSE Credit Club
On the other hand, you can go with a paid credit expert like Experian, who can give you more detail and even a tailor-made financial plan.
Once you know what’s happening in your credit report, you can begin to boost your credit score.
You will also be able to check your credit report for any mistakes. It could be that you find a typo in your address, or in a previous address; you may find something misattributed to you that shouldn’t be there; you may simply find that some information doesn’t stack up. Report any mistakes immediately, as this alone can help to boost your credit score a great deal.
Luckily, a good credit report agency will be able to let you know if and when there are any changes to your report – new borrowing, defaults, and so on. This will help you keep track of things, as well as immediately spot any fraudulent or misattributed activity.
A quick note on credit agencies and open information
Credit agencies are canny. They get their information from plenty of different sources. These sources are increasing as modern technology makes integration easier and more practical.
For example, rent payments represent a new, large source of information. Landlords didn’t previously share your ability to pay rent with credit agencies. Rent payment information didn’t go on credit records. This has changed in recent years, however. Instead, nowadays, private landlords, larger property management companies and social housing providers can all add information.
Thus, evidence that you are paying rent on time, in full, can help you boost your credit history. Failing to do so can negatively affect it.
You should also look out for something called open banking.
There are nine big UK-regulated banks and banking groups. They legally have to allow you to share information about your transaction history, including recent transactions, with all of your income and outgoings, with other companies. This includes lenders. This is open banking.
It can be useful to share this data with credit reference agencies and potential lenders. They will be able to far more accurately judge your financial competence based on recent records, rather than simply on your past credit history. A credit reference agency should be able to share this information alongside your credit report itself.
If you consent to them doing so, Experian can use open banking to augment your credit report in this way. In fact, their Experian Boost initiative allows you to add plenty of other data such as Council Tax payment records, utility records, subscriptions (even to media companies like Spotify, Netflix, and Amazon Prime) and information on your savings. This way, you can paint a much fuller picture of yourself as a potential borrower.
Do note that your bank needs your consent to share any personal financial information.
Keep your details up to date and clear
If you don’t have your current address on your credit report and all your debts and lines of credit, your credit report will suffer. Make sure that your address is up to date with everyone. As and when you move address, notify them.
Note that councils update credit reference agencies with voter data monthly. Getting your ducks in a row and making sure everyone has the right information can boost your credit score almost immediately.
Try to keep on top of payments
It can be hard to pay your bills on time. However, you need to try. This is a fantastic way to show creditors that you are financially responsible. If you think you will miss a payment, don’t simply ignore it. Contact your creditor and ask them to defer payment. This means that you won’t count as defaulting.
Not all bills are equal. Check which ones count towards your credit score through your credit reference agency. Focus on paying these as a priority to boost your credit score.
Ensure your autonomy to boost your credit score
It’s quite common to hold joint accounts and lines of credit. However, your credit rating and that of whomever you hold an account with can affect one another. Your poor credit rating can affect your partner’s credit rating and vice versa.
If somebody’s bad credit is holding you back, separate yourself from them. Get out of any joint credit agreements with them that you can. This will immediately boost your credit score. If yours is affecting your partner’s, do the same – you don’t want your score dragging theirs down.
Don’t apply for credit too often
If you get turned down for credit, don’t apply again elsewhere. Each time you are declined credit, it negatively impacts your credit rating. Multiple applications can make things worse.
Rather, focus on improving your credit rating. Then, when you know you’re credit worthy, apply again. You will likely be accepted, which will in turn further boost your credit rating.
Take out small lines of credit if you can
There’s a bit of a catch-22 in the credit world. If you want to boost your credit score, one of the best ways is to take out a line of credit. Of course, if you can’t take out credit, you can’t boost your score, and so are trapped in a loop.
However, it needn’t be a huge line of credit. Many creditors will allow you to take out small amounts. Keep up with payments, and your credit score will raise.
A credit-building card can be a good idea. They are credit cards designed for people with poor credit who are looking to boost it. They have low limits and high-interest rates. You shouldn’t spend a fortune on them, but you wouldn’t be able to, anyway.
Try simply paying a utility bill or two on your credit-building card each month. Pay it off quickly. You’ll be charged a bit of interest, but your credit score will benefit.
Don’t take one out if you think you won’t be able to keep up with payments. Interest rates can be around 30%, which is ruinous if you’re not fully settling your account each and every month.
Don’t boost your credit score with credit repair companies
All of the information above should get you well on your way to boosting your credit score. You don’t need much more. Simply sign up with a good credit reference agency, follow their advice, and follow the advice above, and you should see a good boost in your credit score. Stay with it and you’ll have a good score in no time.
Avoid any companies claiming to be able to repair your credit rating. They are at best redundant, as they won’t do anything more than I’ve mentioned above. At worst, they can inspire illegal behaviour, such as lying to credit reference agencies.
Avoid them like the plague.
Recap: a boost to your credit score
You don’t need any specialist knowledge in order to boost your credit score. You don’t need a high income. Nor do you need to pay back all your debt at once. As long as you’re making consistent repayments each month, meeting them consistently without any defaults, you will be able to lift your credit score and begin to repair your credit history.
This can be overwhelming if you’re going through recovery. You will likely have enough on your mind without worrying about finances. As I said before, addiction erodes agency and makes dealing with things like this all that much harder.
If recovery is taking up your full attention, you probably aren’t ready to worry about your credit score. It can wait. Your priority has to be your own health and well-being.
However, as you come through recovery and find yourself able to broaden your horizons and make progress in other areas, it is well worth turning to. The ability to boost your credit score represents an ability to take a forward step, repairing aspects of your life that may have been neglected for too long.
It’s not hard to boost your credit score. It can be overwhelming at first, certainly. But it’s actually quite straightforward. Follow the advice above, take any advice on offer from reputable credit agencies, talk to your bank about your finances, and get a bit of a plan in place. Simply meeting monthly bills will do most of the work for you.
Read more: Employment after addiction
- ClearScore: https://www.clearscore.com/credit-scores
- Money Helper - how to improve your credit score: https://www.moneyhelper.org.uk/en/everyday-money/credit-and-purchases/how-to-improve-your-credit-score
- Online credit reports: https://www.gov.uk/government/news/online-credit-reports