If you don’t have a good credit rating, there are things you can do to improve it. But first, you may be asking yourself; “Why bother?”
Well, there are a number of reasons you may wish to consider doing what you can to improve your rating.
Firstly, you will have a better chance of getting credit card and loan approvals. Just remember that debt can be a good or necessary tool but only when it’s used carefully and effectively and that there’s very rarely any such thing as free debt management advice. Nevertheless, having a good credit rating doesn’t guarantee approval as lenders consider factors like income and debt, but it betters your chances of being approved.
An improved rating will also help give you more power in negotiating lower interest rates on a credit card or a new loan and you can give examples of other offers you’ve received from competitor companies based on your credit score.
Similarly, you are more likely to gain approval for higher limits as you’re able to demonstrate that you pay back what you borrow in a timely manner. You should also be able to benefit from easier approval for houses or apartments you may wish to rent for obvious reasons as landlords often use credit scores to screen tenants. And finally, you should be able to get better car insurance rates.
But how do you achieve a better credit rating?
There are a number of basic steps you need to take:
First of all, make sure your records are intact. If you have gaps in your formal record for residency or the electoral register, do something about it by making sure you ‘exist’, formally, at your current address. Without such a record, you’re unlikely to be able to get any kid of credit. A stable background also helps – for example, if you have been at the same address for a long time, or been with the same bank for a decent length of time. Also, make sure your credit records are accurate. Many people have inaccurate records through no fault of their own whatsoever.
Show that you are good for credit by having credit and using it responsibly. For example, the good use of a credit card or a mobile phone deal will help in this regard. Just make sure you use this credit responsibly to demonstrate that you can pay it back. The credit history will work in your favour in the future.
Finally, don’t exceed any credit limits you have. It’s actually better to have a higher credit limit that you don’t exceed than a lower one that you do. So never miss any payments if you can possibly avoid it. This raises a big flag on your credit score. On the other hand, don’t ask for more credit than is realistic for your official level of income.
