How is your credit score and rating? Do you know if your score is accurate? Working to improve your credit score is crucial to getting the best credit card, loan, mortgage and any other products that require a credit check. Does your score need improvement?
Before we delve into credit repair, let’s go over what your credit rating and report are and what lenders know about your credit score.
What is Your Credit Rating and Report?
Your credit rating and report is what lenders look at when they decide what to offer you. Each lender scores you differently and according to their own formula. Despite popular myth, there is no universal credit rating or score in the UK.
What Do Lenders Know About You?1
When you apply, it is important to understand what lenders know about you so you can present yourself in the best way.
- On the application form, lenders obtain the bulk of your information including post code, salary, family size, reason for the loan and your assets.
- If you have any past history with lenders, it will be on your credit score.
- The three UK credit reference agencies are Equifax, Experian and Callcredit. They compile information and send data on any UK individual to prospective lenders. All lenders use at least one agency when assessing your life.
- History from energy provider and phone providers. Do you pay your bill on time?
- If you have committed fraud or if someone has stolen your identity, this will be on your file.
- Rent payments (mostly for social housing and housing associations) will appear on your credit files.
How is Credit Score Determined?
The tools lenders use to determine whether or not they will lend to you aren’t universal. In addition to reviewing your credit application, they also look at any past dealing they have had with you and use three additional sources to develop an understanding of your background.
Suggestion On How to Repair Your Credit2
The good news is, if you have great credit and a solid credit history, you will be provided credit at a decent rate. However, if you have a bad credit rating, your borrowing options will be extremely limited. To improve your credit score, here are some basic suggestions tips you can implement:
- Make sure all of your debts are registered using your correct name and address.
- Check your file to ensure there are no mistakes, like other people’s debts or payments.
- Register on the electoral roll at your current address.
- Try not to submit too many credit applications at once. Lenders view this as an act of desperation, so try to space out the applications.
- Do you know which line of credit you are going to get? Apply for that! Ask lenders to perform a “quotation search” to see the rate first before applying.
- Show lenders you are responsible by paying back (on time) the funds you borrowed. Do this by spending small amounts and clearing the balance.
- Close down any credit agreements you no longer use.
How Do I Improve My Credit Rating?
If you have a poor credit rating, there are simple adjustments you can make. First off, make sure all of your payments to creditors are made on time. If for some reason you are unable to pay, alert the creditor and make the payment the following month. Next, you should obtain your credit history from a credit reference agency to make sure all of the information is current.
What Do Lenders Like On Applications?
There are things that lenders look for on application forms. All of the items below demonstrate consistency, which lenders prefer. Here are a few:
- Fixed landlines, rather than mobile phones.
- Long-term employment history.
- Long-term residence in an owned property.
- Long-term record with the same bank.
1Martin. Amy. (September 2015). Credit scores. Retrieved 23 September 2015 from http://bit.ly/1Vdk7EJ
2This is Money. (29 June 2015). How to improve and protect your credit rating and check your credit report. Retrieved 23 September 2015 from http://bit.ly/1Vdk9fG
The information in this article is provided for education and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness or fitness for any particular purpose. The information in this article is not intended to be and does not constitute financial or any other advice. The information in this article is general in nature and is not specific to you the user or anyone else.