Can your credit score bounce back following a home repossession?

Home repossession can feel like a financial and emotional low point in your life, but it’s important to remember that it’s also a point from which you can rebuild. For many, a key part of the rebuilding process is improving your credit score. In the UK, this task can seem daunting, especially after the impact of a repossession, but with the right strategies and a bit of patience, it’s entirely possible to get your personal credit score bouncing back!

The first step in improving your credit score is to understand where you currently stand. You’re entitled to a free copy of your credit report from the major credit reference agencies, Experian, Equifax, and TransUnion. Review your report closely for any inaccuracies or errors and dispute them immediately. This action alone can sometimes improve your score.

If you’re not already registered to vote, do so as soon as possible. Being on the electoral roll is a simple way to boost your credit score because it helps to verify your identity and address, making you appear more stable to lenders.

Next, prioritise dealing with any outstanding debts. If you have debts as a result of the repossession, contact your creditors to discuss a repayment plan. Showing that you’re actively managing your debts can positively affect your credit score.

Consider applying for a credit builder credit card. These cards are designed for individuals with poor or limited credit history. Use the card for small purchases and pay off the balance in full each month. This demonstrates responsible credit management and can help improve your credit score over time.

Each time you apply for credit, a hard inquiry is made on your credit report, which can lower your score. To avoid this, limit your applications for credit and only apply when necessary. When shopping for loans or credit cards, use eligibility checkers that perform a soft search, which doesn’t affect your score.

Ensure that you’re keeping up with all other financial commitments, such as utility bills, mobile phone contracts, and any existing loans or credit cards. Late payments can significantly impact your credit score. Improving your credit score is a marathon, not a sprint, as it takes time for positive changes to reflect on your credit report, so it’s important to stay patient and persistent.

Rebuilding your credit score is possible and every step forward is progress. With time and effort, your financial situation can improve significantly and get you back on track to improving your financial health.