If you are about to apply for a credit card, personal loan, mortgage, store card, or any other form of credit, then it is important that you are aware of your credit rating and the effect it has on receiving credit.
Your credit report contains your entire financial history along with information on whether you made payments on time or were poor in repaying debt.
When applying for any form of credit (for example a credit card), the lender will conduct a credit search on your details and use the information to calculate whether you are a risky borrower or not. The information from your credit file, along with personal information submitted on your application, will be used to calculate a score based on the specific requirements of the lender.
This score will then be compared against other similar profiles in order to give the lender a clearer indication of your ability to keep up to regular repayments.
Your credit rating will have an effect on every financial application that you make.
Repairing Bad Credit Rating
If you are finding yourself refused credit as a result of a poor credit history (missed payments, default notices), then there are certain things you can do to help improve your overall score.
A key factor is budgeting better. It is important that any monthly repayments (mobile phone bill, credit card payments) are never missed and paid on time. Missing credit repayments is one of the easiest and most common causes of a poor credit rating.
The first step in trying to repaid a poor credit history is to request a copy of your credit report from the two main credit reference agencies, Experian and Equifax.
Once received, it is important that you closely examine each credit report to make sure that your financial history and personal details are accurate and up to date.
Should you come across any mistakes or inaccuracies, (for example a record of an outstanding debt that has since been settled), then it is important you contact the lender in question request confirmation in writing that the debt has since been settled. This will then enable you to contact the credit reference agencies and get your credit report updated.
Refused Credit?
If you find yourself being refused credit, and can’t seem to find any trouble areas on your credit report, then there are a few other areas you can look at.
Are you registered to vote? The electoral role plays an important part in a lenders decision to grant credit. If you aren’t already it is important that you contact your local council and register yourself along with your current address. This will help to add some credibility in the eyes of the lender.
