GETTING A BETTER CREDIT RATING

Having a good credit rating is often the only way to get a loan or any credit, and we know that making sure you have a good rating can seem really difficult. Ironically those with a poor credit rating are generally those that need credit the most, but there are things you can do to improve things! Here are our top tips to getting your credit rating in tip top shape.

WHY IS YOUR CREDIT RATING SO IMPORTANT?

When you apply for credit, your lender will usually use a credit bureau to check your credit rating. It helps them assess the risk of lending to you. Based on that information they will decide a) whether they will lend to you b) how much interest they charge you.

Put simply, the better your credit rating, the cheaper your loan will be!

HOW DO I CHECK MY CREDIT RATING?

The Data Protection Act gives you the right to obtain your full statutory credit report at any time for just £2 per report. Alternatively you can try an online monthly subscription service with the likes of EquifaxExperianNoddle, or CallCredit. A free trial is usually offered too.

HOW TO IMPROVE YOUR CREDIT RATING

So how can you improve your credit rating? Take these simple steps to help improve your chances of getting a good loan…

  • Errors:
    Check your credit report and contact the lender and the credit reference agency immediately if you see any mistakes.
  • Stability:
    Ensure you have a landline phone and you are on the electoral role to help demonstrate stability.
  • Past addresses:
    Check bills aren’t being sent to old addresses.
  • Cancel:
    Consider cancelling old credit cards but don’t cancel them all – managing a credit card well shows you are responsible with borrowed money.
  • On time every time:
    Paying bills on time and staying within your credit limit shows that you manage your money well.
  • Don’t apply and re-apply!
    Avoid applying for credit too often – lenders worry if you are constantly chasing after credit.
  • Avoid bad associations:
    Try not to take joint accounts with someone who has bad credit as lenders worry your own finances could be vulnerable.
  • Avoid formal action:
    Avoid court actions, insolvency solutions and debt management plans where possible.

I’VE MANAGED TO GET A BETTER CREDIT RATING BUT IT’S STILL NOT PERFECT. DOES THAT MEAN I CAN’T APPLY FOR A LOAN?

Not at all! We review each application on an individual basis so we will ask what the purpose of your loan is, and then we’ll ask for your income and all your outgoings so we can measure them against each other.