It is likely that most of us will need to get into debt at some point of your life, such as to buy a new home or to make home improvements. Every time that you apply for credit, your potential lender will check your credit rating to check your credit worthiness. If you have been turned down for credit in the past then it is important that you understand your credit file and boosting your credit rating means that you are more likely to be accepted for the loan or credit card that you want.
But how do you boost your credit rating? Follow these simple tips below…
1: Understand your Credit Rating – There are a number of ways that you can check your credit file. The three main credit reference agencies, Experian, Equifax and CallCredit, hold information about every financially active adult in the UK.
Between them, they will contain personal information about you such as previous addresses and details of any insolvency issues, such as bankruptcy, IVA or judgements against you. They will also contain information about your current and previous credit and financial history, such as how much debt you owe, the credit level available and your record of paying off debt.
For a small fee, you can have access to all of this information. Simply visit one of the companies which are listed above. Some even offer special offers where you can view your credit file for free for a limited period of time, but ensure that you are aware of the terms of this deal so you are not signed into one of their premium services.
2: Dispute any incorrect Bad Credit Rating References – There may be details on your file which is leading you to have a bad credit rating. So it is important that you make sure information about you is correct.
If you believe there are things about you which are incorrect, contact the credit reference agency who can flag the item as “disputed” and consult the company that provided them with your information.
3: Consider adding a Notice of Correction where necessary – A Notice of Correction is a 200 word addition to your credit file which you write. You can do this if an item is factually correct but may create a misleading impression to your creditors as there are worthy explanations as to why the debt was repaid on time or got into arrears with the account etc.
4: Be on the Electoral Roll – Potential lenders will want to know if the information stored about you is correct before they lend you any type of credit. Therefore it is important that you are on the electoral roll. If you have just moved house, contact your local council to ensure that you are.
5: Successfully manage your debt – Potential lenders will want to see that you can manage your debt with a sense of responsibility. Too little debt and you are not profitable to them but too much potential credit could mean you are a lending risk.
A good credit rating will show that you can mange your debts successfully such as clearing a loan or keeping up with the repayments.
If you have not borrowed money before then this could deter the lender as they can not predict how you will be with this credit. To change this you could consider buying usual items, such as your weekly food shop, with your credit card and pay it back at the end of the month.