How to Improve your Credit Rating
Before you can think about improving your credit rating, it’s important that you first understand what it actually is. Each time you take out a loan, an overdraft, a credit card or another form of debt, you’re adding a new chapter to your credit history. A credit history is basically just a report on someone to say how reliable or unreliable they are when it comes to repaying money that they owe.
Credit histories are usually given a score – typically the higher your credit score, the more chance there is of money being lent to you by lenders like banks.
The consequences of a bad credit rating
Having a bad credit history can be a massive pain for students, it can impede their applications for things like overdrafts and credit cards, and in some cases they may even find it impossible to open an account with a utilities provider to provide their accommodation with gas, electric and water (if you’re not living in halls, obviously). If this sounds familiar to you, it’s time that you did something about it and took some steps in order to improve your credit rating.
You should take a look at your credit report online – there are lots of sites out there who will publish it for you. Some of them charge a small fee, but there is a number of companies out there who will offer you a free credit report. Have a look through your report closely and if you spot any inconsistencies on it make sure you report them so that they can be amended or removed.
Improving your credit rating
One of the easiest ways to do this is to simply enroll yourself on the electoral roll. It costs nothing, and it takes just a few minutes. This provides companies with a fixed address for you; so they know where to come knocking if you have any debts outstanding. This means that they’re instantly more likely to lend to you, than someone who doesn’t have a fixed address that’s known to them.
You should always try and keep up with repayments on things like loans and credit cards – even if it’s only the minimum repayment, this will keep your credit rating looking good. If you miss a payment or you think you’re going to miss a payment make sure you inform the lender, they may be able to make provisions for a late payment – thus reducing the likelihood of a red mark on your credit history because you missed that payment.
Each time you apply for an insurance policy, a loan, a credit card, or any other form of credit, a mark will be left on your credit history. This is perfectly normal, but for this reason you should always try to indentify why any applications are rejected, so that you can put any issues right for the future. You should also space out applications – don’t go getting a new mobile phone contract, car insurance, an overdraft and a new credit card all in one week.
Remember that your credit rating stays with you for life, so you need to be really careful with what you’re doing. Typically if you’re refused credit by one lender, then you apply again with another and they reject you too, you’ll only make the issue worse. You should close down any unused credit cards and make sure that any service you use that provides you with credit is paid up fully at the first time of asking.
It’s easier to keep your credit history squeaky clean from the beginning than it is to rebuild a poor credit record.