If you are labouring under the inconvenience of a bad credit record you will know that when it comes to procuring loans you will either be denied, or you will be hit with higher interest charges to offset the risk. The good news is that you can fix a bad credit score, if you follow the tips below.

If it makes you feel any better, every month 90 000 people are smacked with judgements for unpaid debts, sullying their loan prospects for at least five years.

In the US there are a massive 30 million people with less than perfect records. Even if you don’t have judgements, your credit score can still be on the low side, so if you want to qualify for better interest rates, you need to raise your grades.

Find out your credit score

It's important to know where you stand currently, so you will have to spend around R50 to find out your credit score. You can obtain a consolidated credit report by logging onto www.credithealth.co.za. Once you know where you stand you need to take the following steps.

• Pay off as much as you can on your credit cards. By settling long-term loans such as car loans, you can improve your score, but not as much as paying off revolving loans like credit cards and clothing accounts. The credit experts like to see there is a wide margin between the amount of credit you're using and your available credit limits.
• When on a debt elimination plan, advice varies — some debt consultants say you should pay off the highest-rate card first, some say pay off the smallest debt first, but if you are looking to improve your credit score, pay down the cards that are closest to their maximum limits.
• Use your cards sparingly. Carrying big balances can hurt your score — regardless of your ability to pay, it shouts 'risky' to the credit grantor. When a lender gives information to the bureaus, they usually report the balance on your last statement.

  You can increase your score by limiting your purchases to 30 percent or less of a card's limit.

• Check that your limits are correct. Your score may be reduced if your loan agreement reflects a lower limit than you qualify for.
• If you have stopped using or reduced spending on a card or account, rekindling it may help. The older your credit history, the better. But be careful, if you stop using your oldest cards, the lenders may have stopped updating those accounts at the credit bureaus.

  They will not be given as much weight in the credit-scoring formula as your active accounts. It's a good idea to charge a small amount to your oldest cards every few months and pay it off in full at the end of each month.

• Use your good record with existing lenders to earn some points. If you were late once or twice with your payments but have been a longstanding client, see if they will erase that negative info from your credit history. The worst that can happen is they refuse your request.
• After the written request, follow up with a phone call and use your charm. This will only work if you have been a reliable paying client for the large majority of the contract. If you are late every other month, don't waste your time.

Dispute adverse reports, errors

Dispute old adverse reports. Explain that a move to a new town a few years ago resulted in a bill never getting to you (or what ever the reason was, but don't lie!). The older and smaller a collection account is, the more likely the collection agency won't bother to verify it when the credit bureau investigates your dispute.

Make sure that your record is free from errors, even small ones. Your credit score is calculated based on all the information in your credit report, and some errors can seriously lower your score.

Don't lower your credit limit

Don’t ask a creditor to lower your credit limits (unless you have absolutely no discipline). If you do this, it will reduce the gap between your balances and your available credit, which could adversely affect your score.

The better your credit record, the more vulnerable it is to a late payment. If you have a pile of adverse listings on your report, one more red cross will not make much of a difference, but that does not give you licence to collect more.

At the end of the day, a good credit score is a vital tool in your wealth building process, but an even better situation is that you are in a position where you don't have to worry about your score because you don't need credit.