How to improve your Credit Rating

Being eligible for credit means that you will have passed a credit scoring which is performed by a lender. However, you should note that you don’t automatically have the right to be accepted by lenders for credit. Credit can vary from personal loans to credit card applications. In order for your application to be approved, lenders have to assess your risk in relation to providing credit to you. Therefore, lenders will always do a mandatory credit check against your previous and current financial status. When they look through the credit check, your associated credit rating will also be checked. This provides a quick guide to lenders to advise them who is most at risk and who would be a trustworthy borrower. They will be able to perform this check through credit agencies that provide this service to lenders.

Various credit agencies perform credit checks; however, most lenders use the two largest agencies; Equifax and Experian. When credit is applied for, your chosen lender will contact either one of these agencies in order for your credit file to be checked. All credit agencies use various methods to calculate your credit rating. The main criteria that will be used are the following; being signed onto the electoral register, having made payments for existing or previous debt in a timely manner and if you have ever been declared bankrupt or have any county court judgements (ccj’s) lodged against you. Credit agencies turn your credit rating into a 3 digit number which indicates to lenders your value in terms of credit. Many lenders use various methods of credit checking and according to what type of credit you are applying for, the credit check could vary. Therefore, if you are declined by one lender for credit, the same might not apply should you approach an alternative lender for credit.

If you have previously applied for credit and have been turned down, it could be due to you having a weak credit rating. This could have happened simply by mistake or by genuine factors. The main reason for people having a lower credit rating is because they are not registered on the electoral roll. Many lenders look at this as the key point when thinking about approving credit as this proves your name and address. Other factors to consider if you have been declined credit could be if you have regularly made late payments for any current credit you have. This could be late payments for personal loans, utility bills and mobile phone contracts.

To improve your credit rating, the first place to start is to check your actual credit file from the relevant credit agency. The report is available to all people and all you have to do is contact the credit agency directly and for a small fee, they will prepare a detailed report for you. This will provide a detailed report on all your previous and current credit along with any details relating to defaulted or late payments that have been made. You will also be able to check if you have had any county court judgements lodged against you and it will also be highlighted if you have ever been declared bankrupt. Using the report will also enable you to highlight any inaccuracies. If there is any incorrect information, you can contact the credit agency who will amend the information according to any proof that you have relating to this.

Improving your credit score is quite straightforward; you should simply maintain any credit payments that you have. This means that you should always make payments in a timely manner and keep within your credit limits. If you feel that you are having trouble in meeting payments, discuss your concerns with the relevant lender who may be able to assist you with a debt management program. You should also be aware that the more credit you apply for and the more credit you are declined will also impact your credit rating. Therefore, if you are declined credit, you shouldn’t keep applying to different lender until you get what you want, you should request a copy of your credit file to check where the problem lies.