5 Ways to Improve Your Credit Rating After a Debt Relief Order.

5 Ways to Improve Your Credit Rating After a Debt Relief Order.

Title with a credit card in someone's hand in the background.
*This is a sponsored post. All opinions are 100% honest and my own.

This is the first time I’ve ever talked about our personal financial
situation on the blog, mostly because it’s a hugely personal story and I
know how judgemental people can be. But I also think it’s important to talk
about money, how to fix things and, in speaking out, we can help each
other and our friends/family through the tough times. 

Almost seven years ago Warren and I hit such a massive financial stumbling block and we ended up having to sign up to a Debt Management Plan in the hope that things would work out and we could move forward. And we did, for a time, but because of low pay, the high cost of living and having two (adorable!) children, it became a slow and steady climb until we were offered a rather daunting way out in the for of a Debt Relief Order (DRO).

A DRO is not widely known, but it is very similar to Bankruptcy (neither of which are connected to CCJs!). You have to willingly choose to take a DRO and when we did it we paid £90 per person to process it. The first step in the process is to stop paying any debts… You can imagine how terrifying this plunge is, but it’s part of the package and this is the reason you end up with bad credit, not because you forgot or couldn’t be bothered to pay, it’s actually part of the terms. The first year you are monitored, just in case anything changes, and then you are discharged, but your credit is tainted for 6 six years (7 including the monitoring year.). 

I’ve never really known what it was like to have such bad credit; it’s basically the same credit as Bankruptcy and it means you cannot apply for very little during the 6 years after you’re discharged. You also struggle when applying for bank accounts, rental properties and of course, any type of credit, including phone contracts.

I thought, since we’re nearing the end of our 6 years, it would be good to share some tips to deal with this bad credit, as well as how to improve it whether you’re coming out of a DRO or you just have a bad rating.

 5 Ways to Improve Your Credit Rating…

1. Visit Experian

Experian is an amazing resource. It tells you all about your credit situation, and explains in detail why you’ve been given the score on your account. It’s also a good place to explain to potential lenders why your credit is bad. For example, I’ve popped a note onto all my old debts to explain that I defaulted as part of the DRO process. 

2. Get Your Name on the Electoral Roll

Being part of the electoral roll actually increases your credit rating. We move house a lot so we have to remember to pop our names down, but in reality it doesn’t take very long and it can improve your score, however moving house frequently (like us!) might not look too good on paper.

3. Apply for a Credit Card

Believe it or not, but those people without credit have worse credit than those with 5 credit cards and 2 loans. As long as you’re paying more than your minimum then having a credit card shows you can lend and pay money back in time and it shows other companies you’re reliable. When we’d been discharged we applied for a Vanquis card because they accept people with bad credit; don’t make the mistake of applying to loads of ocmpanies though, this will make your creidt even worse. They start you off with a lower amount and increase it over time once you’ve proven you won’t miss a payment and they’ve always been really helpful and friendly as well as sending out lots of special offers over the years. 

4. Get a Landline

Apparently having a landline improves your credit. Strange, but true! Apparently it shows you’re in a stable situation… We rarely use ours, it’s basically for our internet, but it’s there nonetheless!

5. Get Organised!

Dont’ fall into the same trap again. Keep a spreadsheet, receipts, stick to a budget. I remember we had a spreadsheet quite early on before the DRO so it came in use for when the time came and we were free from debt but not free from bad credit!

I hope you find my guide helpful, whether you’re currently in the process of a DRO or if you’re just looking for some ways to make your credit improve.

If you have any tips of your own, please leave them in the comments…

Pin with title and somebody swiping a credit card.

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