Practical Steps for Improving your credit score
Having a good credit score is vital as it can affect your ability to borrow money or access various products such as credit cards or loans.
Prior to applying for a product you have the ability and right to check your score for free and if you aren’t happy with it, there are things you can do to improve it.
What is a credit score?
A persons credit score is generated from information held in your credit report.
The exact number of your credit score tends to differ between lenders, depending on the criteria used in assessing you as a potential customer.
The information held on your credit file and your credit application form is typically used to decide:
how much interest to charge you.
whether to lend to you
how much to let you borrow
Typically the most recent information on your credit file will have the most impact, as lenders will be most interested in your current financial situation. However, its important to bear in mind that information from the last six years will still be on your record.
Its important to remember and factor in that if your credit report shows a few missed payments, you might be charged higher interest by lenders or might not be eligible for some loans.
This is because lenders believe that they will be taking a higher risk when lending to you.
To make sure everything on your record is up to date, not contain any mistakes or fraudulent activity and correct its worth checking your report on a regular basis.
checking your credit score?
There are three main credit scoring agencies in the UK: Equifax, Experian, Callcredit.
You can request full details of your credit file for free or simply get your score online, which is also free.
Each charge to access their services, although it’s possible to access for free through their partner sites.
What information is in a credit report?
Each agency holds slightly different information about you, so it’s worth checking all three for a more accurate picture.
Generally speaking, your file will include:
name, address and date of birth
some search footprints on your file, such as credit applications
financial links to other people – for example, a joint loan or bank account
any late/missed payments or defaults
how much money you owe to lenders
any County Court Judgments (CCJs) against you that are not paid in full within one month of receiving the notice
if you’re on the electoral register at your current address
if you have been declared bankrupt or entered an IVA (Individual Voluntary Arrangement).
What is a good credit score?
All lenders have their own different criteria and selections for rating credit scores.
Not surprisingly, if you have a good score with one of the main credit reporting agencies, it’s more than likely you’ll have a good credit score with your lender.
A good credit score with:
Callcredit is scoring 4 out of 5
Equifax is scoring over 420 out of 700
Experian is scoring over 880 out of 999.
A good credit score doesn’t guarantee that you’ll be approved for credit or offered the lowest interest rates.
How long will it take to improve my credit score?
In general, credit history is built up slowly over time as you increase the number of on-time payments you make.
The longer the bill goes unpaid, the greater the likely impact on your credit score. Keep a close eye on your credit score to help spot issues.
Most negative marks will remain on your file for at least six years. After that time, everything is deleted from your file, including missed payments, defaults, bankruptcy and CCJs.
However, there are some quick improvements in the next section that you can make today to begin raising your credit rating.
improving your credit rating and credit score?
If you have a low credit rating, there are several things you can do to start improving your score today:
Register on the electoral roll:if your name’s not on there, you’ll find it much harder to get credit.
Check for mistakes on your file:even