It's never great if you've had a credit score or credit history issue due to making late payments, missing payments or even defaulting on a loan.

The good news is you can get yourself into a better position and improve your credit score, but it will require a plan and it will take time to rebuild credit. The length of time it takes to rebuild credit will depend on various factors, such as the severity of previous credit issues and the steps taken to improve creditworthiness. It can take from several months up to six years to rebuild credit.

How do credit scores work?

The UK has four main credit reference agencies (also known as credit bureaus) - Experian, Equifax, TransUnion and Crediva. The first three provide a consumer credit report and credit score, but ultimately all four will provide credit information to lenders that will impact lending decisions.

Check your credit reports

A good start is to check your credit report with all the credit reference agencies. Checkmyfile provide a service whereby you can see your credit report with all four credit reference agencies. Checking your report to identify any errors or negative items is a good way to ensure nothing additional is having a negative effect on your credit score.

Be patient

If you have had a credit issue such as late payment history then it's a good idea to wait up to a year, or at least 6 months before applying for new credit products, such as credit cards or loans, to give yourself enough time to demonstrate responsible credit behaviour.

Some negative information, such as missed payments or defaults, can stay on your credit report for up to six years. The impact of this on your credit score will reduce as long as you continue to make responsible credit decisions.

Things you can do to help rebuild credit.

There are a number of things you can do to help rebuild your credit and ultimately help your financial situation.

Register for the electoral roll

One of the most important is to be on the electoral roll for the property you live at - this can help credit reference agencies confirm your address. Lenders want to ensure that you are who you say you are, and you live where you say you live.

Close accounts

Closing old or little-used accounts and consolidating your lending across fewer, well-maintained accounts will have a beneficial impact on your credit score.

Credit utilisation

This is simply how much of the credit available to you is used.

If you're lucky to have a credit card after experiencing credit issues, then make sure you don't max out your credit card and keep the outstanding balance well within your agreed credit limit. If you have more than one credit card then spending equally across them both is also likely to help. Making sure any credit card balances are cleared each month can also help rebuild bad credit.

Pay bills

Having bills in your name and paying bills on time can help with the credit rebuilding process. It is imperative that you do not have a missed payment on the credit repair journey and ensure you make on time payments. This can also help with your future credit line.

Report your rent payments.

As a tenant, reporting your rent payments via CreditLadder can also help improve your credit position and credit score.

CreditLadder is the only way to improve your credit score and position across all four of the main Credit Reference Agencies in the UK, namely Experian, Equifax, TransUnion and Crediva.

Summary

How long does it take to rebuild bad credit? Unfortunately, it will take time to rebuild your credit score and many factors influence the speed this will take. It will vary from person to person and the factors that are impacting their score. Some people may find their credit scores improve in several months whereas for others moving from a bad credit score to a good credit score it may take several years.

As mentioned earlier, any negative marks on your report, such as missing payments usually stay on your credit file with the credit reporting agencies for six years.

If you're on the 'rebuilding bad credit' journey it's important to remain patient and to avoid behaviour such as having further missed payments. A good credit rating is possible by following the steps above. These include regularly checking your file for any credit score update or anything that may negatively affect your credit profile. Following these steps should eventually help access a credit limit increase or even access to a personal loan at a better interest rate.

CreditLadder can help you improve your credit score

If you want to improve your credit position by reporting your rent payments, CreditLadder is the only way to improve your credit score and position across all four of the main Credit Reference Agencies in the UK, namely Experian, Equifax, TransUnion and Crediva. Building up a high credit score has a lot of benefits, including helping you access finance at better rates - this can also help save you money.

CreditLadder also runs a free mortgage application service in partnership with Tembo which will tell you how much you could borrow.

Remember the information provided in this article is for information purposes only and should not be considered as advice.