Improving your credit rating
Improving your credit rating makes it easier to borrow extra money when you need to. While other factors are taken into account, it's worth taking a few steps to try to improve yours.
What's a credit rating?
Your credit rating is used by lenders to assess the risk of offering you credit. It's calculated based on information in your credit report.
Your credit report will contain information on things such as:
- Your recent address history
- Any outstanding credit card and loan balances
Each lender then assesses this information, and the information you have provided in your credit card, overdraft or loan application, before offering you credit.
How can you improve your chances of being offered credit?
Keep up to date with payments
Paying your existing credit card and loan repayments on time will show that you're more likely to be able to meet future credit payments.
Set up Direct Debits for your bills
Lenders like to understand how much customers earn and how they spend their money. By having their salaries credited directly into their bank accounts, and paying bills by direct debit, customers can provide evidence of good money-management skills.
Don't make multiple applications at once
Applications will appear on your credit report as searches, and too many in a short time could be seen as financial distress. Be patient, not persistent. If you're refused credit for a product or service, don't keep reapplying. Wait a few months before applying again.
Obtain a copy of your credit report
Contact a credit reference agency to get a copy of your credit report. This will show you all the information about you that lenders and retailers can see. Try Experian , Callcredit or Equifax . These agencies must give consumers copies of the information they hold. There's a small charge and you'll need to provide the agency with your full name and addresses for the past 6 years.
Dispute any inaccuracies
Mistakes can happen but don’t let them harm your credit profile. Once you have your credit file, check all the details carefully. You can appeal if you find any inaccuracies or add a note to your file to explain any special circumstances.
Show you can use credit sensibly
Surprising as it sounds, never using credit could also be a problem for customers, because they may have no track record. Using a credit card responsibly and paying it off regularly can help you build a credit history. Our credit card eligibility checker allows you to apply with confidence by giving you an indication of how you'll fare during the full credit card application process.
Make sure you are on the electoral roll
Banks and retailers carry out this standard check to ensure you are or have been registered at the addresses you provide.
Try to pay off any outstanding debt
Although unpaid credit and CCJs will remain on your file for 6 years, they'll be marked as settled once you pay the debt. This could be taken into account when you're making future applications.
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