You are no doubt aware that your credit rating can have a detrimental affect on your ability to raise finance through the likes of a mortgage, loan, credit card or the type of bank account or even prevent you from obtaining a contract mobile phone. Therefore, it is important that you are aware how to check and improve your credit rating.
What is the importance of your credit rating?
It is one of the things that lenders will take into account when deciding whether to lend you money and can even affect the interest rate they charge.
What affects your credit rating?
Below are some of the things that may affect your credit rating: –
• Your credit rating will be negatively affected if you have got into financial difficulty due to excessive levels of borrowing resulting in you missing loan repayments, going into arrears on your mortgage or going over your credit card limit. These could result in defaults being registered with the credit reference agencies that could lead to county court judgements (CCJs) and then ending up in you being declared bankrupt.
• Being a party to joint borrowing where the other party has a poor credit history.
• If you applied for a great deal of credit over a short period of time lenders will be cautious in their dealings with you.
• Not being on the electoral role and moving home frequently.
• If the information recorded with the credit reference agencies is incorrect perhaps because someone has fraudulently used your personal details to obtain credit.
How to improve your credit score
There are a number of things you may be able to do to improve your credit rating like: –
• You should consider doing a credit rating check by arranging to obtain an annual credit report from the three main credit reference agencies that are Equifax, Experian and Call credit to make sure the information is accurate and, if not, have any mistakes corrected.
• Register on the electoral role.
• Try to negotiate with those that have lent money to you to see if they will remove any defaults if you offer to repay all or part of the amount outstanding.
• Don’t apply for credit until your credit rating has improved.
• Keep up agreed repayment plans with your lenders.
• After a reasonable period of time, consider applying for credit builder credit cards for bad credit but make sure that you clear the outstanding balance each month to avoid paying any interest that can often be in excess of 30% per annum.
Opening a bank account with bad credit may be possible as there are a number of banks, building societies and other financial institutions that offer potentially suitable accounts some of which are listed on this website.