Credit scores can have a major impact on finances. Having a negative one can cause you to be rejected for a loan, credit card or mortgage. It gives the lender an indication of how you manage money and repayments. Ensuring that you have a decent credit score can make all the difference. Things that can influence a credit score include;
- Credit accounts
- Mobile Phone contract
While some of these cannot be controlled, there are other ways you can increase your credit and improve your chances of getting credit in the future;
1. Dispute unfair defaults
Some mistakes do happen, but to unsure that these mistakes do not reflect badly on your credit report, it is best to correct it as soon as possible. Contact the firm and ask them to remove it once the issue has been resolved.
2. Keep up with repayments
One of the important ones and this can have a major negative impact on your credit rating. Ensuring that you maintain repayments on loans, credit cards and mortgages will show the lender that you are more than capable of managing credit. Set up a direct debit if you are worried about missing a payment. Also, try and pay more than the minimum payment.
3. Register to vote
The lender wants to know if you are a real person and by registering to vote, allows the lender to look you up on the electorate to prevent fraud. Also having a consistent address can improve your rating.
4. Build credit history
Lenders like to see that you can be responsible, build credit where you can and maintain the repayments. This will provide evidence that you can manage debt. Things like credit cards and short-term loans can benefit your rating.
5. Avoid making too many applications in one go
While building up credit can improve your rating, it is best not to apply for too much credit all once. This shows the lender desperation and can influence their decision.
6. Close down any unused accounts
Lenders prefer to see that you can manage debt, but avoid having accounts that are already paid and are unused. Quality over quantity can help improve your rating.
7. Don’t withdraw cash on credit cards
The lender will see this as lacking income and poor money management, while at the same time, being very expensive.
Other things like landlines, long term employment and long term records with your bank can have an impact on a decision. When applying, ensure all the personal details are correct. Showing that you can be consistent will show that there is no risk in a default payment.
Credit stays on your report for six years and if you have been rejected for credit by one bank, does not mean they all will, but ensuring that you follow the advice above can have an impact on your credit rating. Even those with good credit are considered risks and rejected. It is also advised to review your credit before you apply. You can manage any errors that way and it can save embarrassment. For further information, please click here
By Harry Price
Harry Prices lives by the sea and enjoys taking his 3 dogs for long walks along the coast.