What Affects Your Credit Rating?

Everybody needs to borrow money at some point in their life, whether that is for a student loan or a mortgage. Most of the time that you borrow money, there will be checks on your credit rating to make sure that you can be trusted in paying the money back. If you are worried about a low credit rating, there are ways to help fix it and ensure that you are approved for credit.

If a company turns you down for credit, you can ask for a reason why. By law, the company has to provide you with your credit rating and the reason why they have turned you down for credit, which will help you understand how to improve it. You should check your credit rating regularly to find out whether you need to improve it.

There are different areas that will affect your credit rating, including where you live and who your partner is. Your employment history and social security information is also included to help with identity protection. Checking it regularly, will ensure that it is all up to date; you can request it to be updated if you have proof that something on there is wrong, which is another reason to check it regularly.

The first way to improve your credit rating is by ensuring that you are on the electoral roll. This does not mean that you have to vote if you do not wish to but being on the electoral roll will help with the verification of who you are and your address. You may have forgotten to do this when you move home so you should ensure that you do it; it is possible to fill in the information online so it is definitely not hard or time-consuming.

If you are disputing anything that is on your file, you should include a 200-word statement, which is a notice of correction. This can be a change in your circumstances and so a reason for arrears to be on there, or it can be something that has been falsely added to your report. All lenders will have to read these notices by law but it does not mean that they have to change their decision.

Missed payments will make your credit rating go down and this could be something as trivial as a phone bill. These missed payments will be on your bill for three years and can affect your chances of getting credit. If you know that you are going to struggle with making the payment, you can telephone the company and explain the situation to them; you may be able to come to an agreement to protect your credit rating.

You may think that not borrowing money will protect your credit rating, but it actually has the opposite effect. Simply having a credit card for a year that you use and pay off in full each month can prove that you can be trusted with money and will improve your credit rating; there are now plenty of cards that offer rewards so are something to consider. However, too much on your file, will be a cause for worry as it could look like you are over stretching your limits. If you have accounts that are now dormant, close them and protect your credit rating.