How To Improve Credit Score


 In simple terms, a person’s credit rating basically shows how credit worthy a person is, based on a statistical analysis of their credit files. The score can usually be found in a credit report which is sourced from credit bureaus.

A person’s credit rating or credit score (same thing) is of extreme importance when they want to borrow some money from the bank or another lender. So a bank for example, will analyse a person’s credit rating to see the risks involved when lending money to this particular person. This in turn allows the lender to see who will generate the most revenue for them, and who will cause them a loss.

In today’s economic climate, a person’s credit rating is extremely important. A bad credit score can really limit you’re borrowing options.

Fortunately, there is no universal credit rating meaning that though one lender may reject you, another may accept you. Each lender has their own ‘perfect borrower’, and make their analysis of potential borrowers against their perfect model. Each lender takes into account many aspects of the person’s financial profile to finally come to a decision as to whether or not lend a person money.

So here a few tips to improve you’re credit rating and increase you’re chances of being accepted by a lenders.

1. Credit card card companies may reject you if they see that you pay off money on you’re cards in full. If this is the case, then the company is making no profit from you! They will also be looking to see if you transfer you’re debts to 0% cards, also indicating that there is no profitability in you. Furthermore, they will also be looking at how often you use you’re cards, because if you don’t use them often, then this will be a disadvantage against you. In the eyes of the companies, the profitable customer is the one that does not pay in full, however meets the minimum requirements and does not fall behind on payments.

2. Utilities companies have also now began sharing information in regards to payments by its customers. So missing payments to you’re utilities providers will put a negative mark on you’re credit rating. Not all the companies share you’re information but some reserve the right to in future. At this moment in time, the companies that do share you’re information of missed payments are British Gas, BT and Scottish Power. Those that reserve the right to do so in future include Eon, Npower, Scottish and Southern, Sky and TalkTalk. The one company that does not share you’re information is EDF. So don’t miss you’re payments!!

3. Check you’re credit rating yourself. Take a look at you’re credit report, get an idea of what the company will see. The report has you’re personal details, whether or not you are on electoral roll, you’re credit accounts, recent searches on you’re file and financial links with other individuals. For any negative aspects on you’re report, you could then ready an explanation if the lending company asks you about it.

The 3 main reference agencies which allow to view you’re credit report are, Equifax, Experian and Callcredit. This of course costs money but here is way you can get it free.

The reference agencies main source of income comes from the person wanting to view their credit report. They would usually pay monthly for this and would total to around £80 a year. However, to lure you in, what the companies do is offer a month’s free trial. They make you set up a direct debit payment or regular credit card payment. However here is the trick. As it is a month’s free trial, you can cancel at any time. So when you have viewed you’re report, just cancel. So you are able to view you’re credit report absoloutely free!

Check thouroughly, every single detail on you’re report as even an inaccuracy on you’re address could lead to rejection. For example if you live on 37 Joebloggs road, and on you’re report it said 39 Joebloggs road, this could mean that you get judged on some one else’s report who may have a bad credit history. Check for other inaccuracies such as debts you never had as these inaccuracies pop up time and time again in credit reports.

If there are inaccuracies, then you will need to mail the agency in question and ask them to change it. Providing they agree there is an inaccuracy, they will change it. However if they don’t, the you can make a complaint to the Information Commissioner or add you’re own comments titles ‘notice of correction’, which will make it more likely you don’t miss out on great terms.

 4. Close down any credit agreements which are no longer in use.

5. Don’t make too many applications for credit in a small amount of time to show lenders that you have a rich credit history, they will spot this and it will most likely go against you. Also, only apply for credit which you are likely to get. Though lenders cannot see if you have been rejected for an application, they can see if you have applied, and therefore work out if you were rejected by looking at which credit accounts you currently have open.

6. If you can avoid it, try not to do joint financing. Because any negative aspects of you’re partners rating affects you’re credit score equally. If you split, write and tell the agencies right away so it no longer affects you.

7. If you can manage, take out a card with a high interest rate. These cards are usually store cards, and lenders see this as a big positive when analysing you’re report. If you find that the monthly repayments are impossible for you to pay off, then ask for smaller repayments.

8. If you have county court judgements against you, then make sure you pay them off in full and as soon as possible. then make sure that records at the Register of County Court Judgments are amended.

9. Register on the electoral roll at you’re current address. Being registered is seen as a positive on you’re credit report.

10. Consistency. Being consistent on the following things, though many are out of our control:
Same land line number
long-term employment history
long-term residency at one address, owned and not rented
long-term loyalty to the same bank

Ok so there are a few tips on how to improve you’re credit rating.

Thanks for reading, I hope it helped!

 

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