personal credit rating

Companies use credit ratings as a way of deciding whether they will loan cash to you, how much they will loan and on what terms.

If you fail to receive a loan because of your credit rating it can be a very frustrating process. Lenders will rarely tell you exactly which criteria they use. However, suppliers who have signed up to the voluntary banking code will give you general indications.

Remember that institutions vary in terms of what they consider important and the number of points you need to ‘pass’, so don’t despair if you fail, try another lender!

What Affects a Credit Rating?

Credit ratings are affected by the obvious negative points such as failing to pay previous debts or being subject to an action such as repossession or bankruptcy. Many people, however, fail to gain a good credit rating despite having an excellent financial track record.

A sure-fire way of receiving a bad rating is by not being on an electoral roll. Many companies will insist that you are on the roll in order to loan you any money.

As a credit rating looks at your past behaviour, it may be that having no previous lending is actually a bad thing! If you have never borrowed in any way before, then the companies have little to go on. The best way to achieve a good credit rating is to use items such as credit cards, but to pay them off fully, every month.

Buy now pay later deals are also a great way of building credit ratings. However, this method only works if you pay them off fully and on time.

How Can I Repair a Bad Credit Rating?

Firstly, determine what exactly is causing your poor credit rating. Experian and Equifax are two of the larger credit rating companies that you can contact to request a your credit file. Alternatively, contact your bank to see how they view your credit rating and what potential problems you may have.

If you find that there are errors on your file, make sure that they are corrected immediately. It is also important to check that you are not paying for someone else’s bad credit, so check whether it is you, personally, or your address that is affecting your rating.

Credit ratings can be easily repaired and a few extra points can make all the difference. So, don’t ignore the small things and do pay off your credit card regularly.

Personal Credit Rating