A lot of people don’t realise what affects your credit rating and how much your credit rating can impact on getting a loan or credit. Your credit report is a record of your history of loans, credit cards and other credit options. Having a bad credit rating can negatively influence your chances of getting finance so understanding what it is can be very useful to you.
Comprehensive credit reporting was made compulsory for lenders on 1 July 2018. This means that a lender must look at both the negatives and positives on your credit file and not just the negatives, which is how things were done previously. This is great news for consumers and will also make it easier for lenders to assess their borrowers.
Knowing your credit score and credit history can be a great advantage for you to be able to prepare for the future. There are several benefits that come from having a good credit score. One of the main ones is that companies will want to do business with you so you have more choice and you are more likely to be approved. Another benefit is you can borrow more money and often the interest rates and fees will be lower.
Things that can positively impact your credit rating:
• paying bills on time
• Paying off loans
• reducing the limit on a credit card
• making more than the minimum repayment
• keeping the amount owing on your credit card low
• Consolidate multiple debts
Things that can negatively impact your credit rating:
• paying bills late
• defaulting on loans
• Making lots of credit enquiries
• Having multiple credit cards and loans
It is definitely a good idea to keep track of your credit file, especially knowing what will negatively or positively impact your credit rating.