Your credit score will be used by the lender to evaluate your loan application and determine the risk involved in making the loan. Whether a customer is approved for a loan and, if so, the interest rate attached to the proposed loan, will depend on the risk that is chosen. They are important, so we thought it wise to get the lowdown on credit scores.
Credit Reports
Anyone with access to their own credit report can view their credit score status and, if necessary, take action to improve it by analysing the data on it. A credit report typically costs £2. However, some providers of credit reports provide 30-day free trials. To avoid being charged, make sure to cancel your subscription before the 30-day period has passed. If there are errors on the report, you may be able to raise your rating by examining it; in that case, you should alert the credit bureau.
Typically, a credit report contains the following details:
your whole list of credit accounts (including bank and credit card accounts).
Information about anyone who has a financial connection to you (joint accounts for example).
Information from public records, such as County Court Judgments (CCJs), home foreclosures, and bankruptcies (which stay on record for six years in total).
providers of your current accounts.
Your personal information, such as your name and date of birth, current and previous addresses, whether you are on the electoral register or not, and if you have ever engaged in fraud, is also included in your credit scoring file.
Improving Your Credit Score
As was previously said, getting a copy of your credit report and checking it for errors should always be the first step. Report any inaccuracies you discover to the credit bureau so they can be fixed. Your credit score should therefore rise as a result.
Delete any unused credit cards as well. Unused cards might actually harm your credit score because they count as available credit already and may prevent you from obtaining “additional” credit. Cancel a card if you won’t be using it in the future. Don’t submit several applications for financing. Lenders may perceive a person as desperate if they observe them making several attempts to obtain financing. It can also be an indication of forthcoming financial issues. Applying less often suggests greater stability in your financial affairs. Make one application, when you are ready. Ensure you can make repayments. Plan ahead.
Lowdown On Credit Scores – More Tips
Don’t let associations damage your reputation. Avoid establishing financial ties with somebody who has a rocky credit history. For instance, it might be in your best interest to avoid having a joint account if your partner has a bad credit history.
Punctually pay your expenses. Missing payments on invoices could hurt your credit rating, which is pretty self-explanatory. Furthermore, paying on time gives the impression that you are reliable and in charge of your finances.
Make sure your name is on the voter list. Once more, this is favourable for your rating because it implies stability and civic engagement. This is constantly advantageous to lenders.
Always own a landline telephone. Again, a lender might interpret this as steadiness. Give complete information for a more thorough understanding of your situation.
Lowdown On Credit Scores – And There’s More!
Stay at one location. Continuity, etc. On credit application paperwork, don’t lie. Your credit score may be negatively impacted by inconsistencies. Even lenders can view this as fraudulent. Get the best price for you by being honest.
Utilize prepaid cards that help establish credit, as some of them can raise your credit score. The way it works is that the provider of the prepaid card “loans” you a certain amount, typically £60. To return your £60 “loan,” sign a credit agreement and pay the card company £5 per month. If you haven’t missed any fee payments, this won’t appear on your credit report at the end of the year. It will seem as 12 successful months of repayments.
And one more simple advice: Pay off your bills!
