What is a Credit Score?
Your credit score is a numerical record of your history of loans, credit cards and other credit options. Having a low credit score can impact your ability to borrow funds. A higher credit score means you have a good credit rating enabling you to borrow funds easier.
Your credit score is significant because it depicts if you are high risk or low risk to your lender. This will also determine how much a lender will be able to lend to you and will also define your interest rate.
Find out your Credit Score
It is imperative you do your homework and find out what your credit score is. You are able to access your credit score through a credit agency like Equifax. You will receive a score between 0-1200 the higher the score the better the credit rating and a low score means a bad credit rating.
How to Improve your Credit Rating?
A few ways that you can better influence your credit rating and score that can bring about a successful outcome for borrowing funds is to:
- Check that all your personal details are correct
- Ensure you are aware of how many credit enquiries you have made and haven’t made more than 3 in the last few months
- Ensure you have been stable in your residential address and employment status (make sure you have a minimum of six months before applying for finance)
- Ensure you have paid off any defaults
- If you have been declined for credit from one lender, ask the reasons why and hold off on going elsewhere for a while. This could harm your chances of being successful with your future credit applications
- Pay off your credit card on time preferably in full to ensure you are in control of your finances
- Reduce your limit amount on the credit card
- Pay your bills on time to avoid being referred to a debt collection agency which may result in a default on your credit file. One way to ensure this happens is to organise direct debits to ensure bills are paid on time
- Pay off any small loans or payday loans where possible as this may result in a lower credit rating
- Consolidate multiple credit cards and debts
- Endeavour to make extra repayments on loans
Stay in Control
Being in control of your finances and using the tips provided, you can warrant yourself the strongest possible credit rating and therefore, better interest rates. You then are very much in control of how you are perceived by a potential lender.
Once you have conducted these simple checks, you will be able to make sure everything is under control with your credit score as best as possible.