Ever sought to have credit and was declined? How was the feeling? It’s probably not a pleasant feeling. Is it? In the UK and other parts of the world, credit ratings are shrouded in mystery and myth. The fallacious reasoning is that credit ratings or score are universal. However, this is not the case as different financial institutions use different analysis or methods when it comes to determine your credit rating or score. Basically, your credit rating is as a result of a combination of a number of things. These are:
- The contents of your credit file
- Details you disclose when you apply for credit
- Your previous history with the lender you are seeking credit from
In the UK, Experian (Credit Expert), Callcredit and Equifax are some of the well known credit reference agencies tasked with compiling information on your credit applications as well as how you make payments on the same. Of course, we can’t be oblivious to the fact that suffering rejections when you badly need money is one of the worst things that can happen to you. That notwithstanding, it’s important to stop painting a grim picture but rather shed light on how you can improve your credit rating and improve your chances of having your credit application as and when you need it.
That being said, here are a number of ways in which you can improve your credit rating:
- Ensure you check your credit file before making any applications for credit. This can be done through paying a small fee or on a free trial basis. The idea is to basically ensure that all information contained in your file is accurate. Should there be a discrepancy, settle it out with your previous lender before applying for credit.
- File a form of disassociation from your ex partner. If you have a joint mortgage or have taken out a loan with your ex partner be it business partner or wife/husband, you are deemed to be financially linked. What this means is that your ex partners credit report will have a bearing on your current credit rating. To avoid this, file a form of disassociation and improve your own credit rating.
- Ensure you are a registered voter at your current place of residence. Lenders always want to ensure that you reside where you say you reside. To improve your chances of getting credit, ensure that you are registered to vote at the place you have indicated as your address. Your credit record need to be clear on your address details.
- Avoid making late repayments or missing altogether. Six years is the duration that missed or late repayments stay reflected on your credit file. Unless you can time travel, this is without a doubt a long period of time. Rather than having your credit application declined because of this, purpose to be making repayments on time and without fail. It has a positive impact especially when you applying for credit.
- Close all unused bank accounts, mobile contracts and credit cards. Considering that lenders use different methods for determining whether you are suitable for credit or not, it’s important that you contact service providers and close accounts that might rack up the amount of money you owe financial institutions. Accounts with 30% or below balances of the required credit limit are deemed by lenders to have low risk. It’s not just enough to dispose the cards but you need to contact your banks and have them close the accounts.
- Always pay off your debt in totality. Lenders get a good impression of you if they determine that you are good at managing your debt and that you always end up paying it off. It improves your chances and signifies that you have good behavior in so far as repaying of debts is concerned.
By taking into account the aforementioned, you can be rest assured that you will improve your credit rating and wondrously reduce your chances of being declined when you apply for a loan.