Advice for UK borrowers to improve their credit rating
Your credit score counts for a lot. From getting a mortgage offer to entering into a new cell phone deal and, of course, accepting a loan when you need it most, your credit rating can affect the willingness of lenders to deal with you.
The good news is that checking your own credit score is free, easy, and you can improve it. Here we take a look at the basics of credit score and how you can achieve a higher score and better credit options.
What is a credit score?
Simply put, your credit score is a rating assigned to you that lenders can then use to decide if they are ready to approve your loan applications, among other things. Your rating is far from random and is made up of the information contained in your credit report. This could include all the financial decisions – good or bad – made in the past six years.
The main characteristics of your file that will affect your credit score include your financial connections with other people (through joint bank accounts, for example), your payment history with lenders and other credit providers, as you have a history of bankruptcy or other insolvency solutions and county court judgments that have been rendered against you.
Contrary to popular belief, your credit report does not contain details of your salary, student loans, or criminal record if you have one.
What is a good UK credit score?
Whether or not a credit score is good is a subjective one. Ultimately, it depends on the credit reporting agency you consult. The scores that are considered ‘good’ by the three major UK credit rating agencies are as follows:
TransUnion: 781 or more out of 850
Equifax: 420 or more out of 700
Experian: 880 or more out of 999
Unfortunately, these scores don’t ultimately determine whether your application to a lender will be successful or not, but they do give a good idea of what the problem could be.
How to improve your credit score
If you have a bad credit rating, your chances of being approved for a loan or any other form of credit may be much worse than someone with a less turbulent financial past.
Fortunately, there are a lot of things you do to improve your credit score, and we’ve covered some of the most effective methods below:
Register on the electoral roll
As simple as it sounds, getting your name listed against a property on the voters list could help improve your credit score. That’s because credit reference agencies will be able to verify your identity more easily, and your property ties might reassure lenders that you won’t just go missing without a trace.
Pay on time, every time
No matter what credit score hacks you use, all your efforts will be in vain if you don’t pay your bills on time. Payment history is the most important factor that credit reference agencies and lenders look at when deciding on a credit score, and therefore missing a single payment could seriously hurt your chances of getting the terms. and the most favorable rates on a loan.
If you are going to be overdue or if the payment date has already passed, call the creditor. They may be willing not to point out your digression as long as you show a level of willingness to resolve the issue.
Avoid making too many requests
Applying for several loans or credit cards at once may seem to improve your odds, but it will actually hurt your creditworthiness in the eyes of potential creditors. The best policy is to use a credit broker to find the most suitable lender for you, as every complete application will result in a full credit check – leaving a mark on your credit report for other businesses to find.
Plan your credit usage
Another often-cited tip is to plan your credit usage. In addition to being a good form of financial management in general, planning will allow you to stay in control of your credit usage – which is the number that represents how much of your existing credit limit you’ve used. Smart money never exceeds 25% of your credit usage, but it’s not always easy.
How To Get A Loan With Bad Credit
These tips could help you improve your credit score and improve your chances of getting approved for your credit applications in the future, but what can you do if you are not waiting for the money you need? not an option?
Fortunately, there are a considerable number of lenders who are ready to offer small loans for bad credit. These are available even for people with very low credit scores and allow borrowers to withdraw the money they need with the option to repay on a flexible term that suits them.
The bottom line is that having a bad credit rating won’t necessarily stop you from getting a loan, but you might have a harder time getting approved than people with better credit histories. By putting the tips in this article into practice, you may be able to improve your chances for the future, and in the meantime, many direct lenders offer loans that are accessible to people with poor credit.