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To get hold of the best deals and rates (especially important if you're looking for a mortgage), having a good credit rating is essential. If you've made some mistakes with your finances in the past, your credit score could well be less than rosy.

Luckily, thinkmoney is here to help. We've put together a guide to help you improve your credit rating - as well as some tips to help you keep it healthy throughout 2013 and beyond.

How to improve your credit rating

Here's a step-by-step guide to cleaning up your credit rating.

    • Stop applying

If you've been turned down for credit, it's not a good idea to carry on applying for it. This may be seen as 'desperate' by some financial companies, making it less likely they'll lend to you. Instead, focus on improving your credit rating using some of the tips in this guide.

    • Make sure your credit report is correct

It's possible that there are some mistakes in your credit report - so it's important that, before you do anything, you check it for errors. Check all three credit reference agencies: Equifax, Experian and Callcredit, as they may hold different information. If you find any mistakes, contact the reference agency as soon as you can to have it corrected.

    • Close unused accounts

Even if you don't use an account - such as a credit card - it's likely that financial companies will still look at it when you apply for credit. It may count as credit that is 'available' to you, and if a company thinks you have 'enough' credit available they may be unwilling to offer you more. If you don't use it anymore, think about closing it.

    • Make sure you're on the Electoral Roll

Most companies will check whether you're on the Electoral Roll when you apply for credit, as part of their efforts to combat identity fraud. Ensure that your current address is the same as the one registered, too.

    • Prove that you're secure and stable

Companies want to know that you'll be able to repay what they lend you - and if you move house or switch jobs a lot, this may work against you. It also helps to have a bank account, or an alternative such as a building society account or a Current Account with thinkmoney.

How to keep your credit rating healthy in the future

Once you've taken steps towards making sure your credit rating is healthy, it's important to keep this up and carry on protecting / improving your credit rating.

Here are some ways to keep your credit rating healthy:

  • Only take out credit you know you can afford to repay. Ideally, make sure you can afford to repay more than the minimum payment every month.
  • Make your debt payments on time - pay off your debts in full when possible. Set up a Direct Debit if this makes things easier.
  • Avoid borrowing up to your limit - maxing out your credit cards or overdraft, for example. Lenders may see this is a sign that you're struggling financially.
  • Pay your bills on time, as this will show that you are responsible with your finances.
  • Make sure you establish a credit history. Even if you never need credit, it can be worth taking some out just so you can prove that you can repay it each month.
  • If you have a mobile phone, pay your contract in full each month and avoid missing payments.
  • Make payments early if you can.

Budgeting properly can help you to avoid the need for credit altogether. Credit can be useful - but it's not advisable to rely on it to get you by each month. Sit down and go through your income and expenditure in detail, or use a service such as the thinkmoney Current Account to help you plan out - and stick to - a budget.

If you'd like to know more about your credit rating, thinkmoney has put together this guide that lays down everything you need to know about your credit rating.

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