Your credit rating says a lot about you – make sure you manage it effectively.
There may be several reasons you are suddenly thinking about your credit file. It is probably because you want to take out a mortgage or loan, or maybe another bank account. Your creditor may say something like ‘we are going to do a credit check on you’ which roughly translated, means: we are going to look at how well you have managed your finances in the past, and make a judgement on whether we can trust you to manage this one. So, of course, you want it to look good. You can get a loan if you have bad credit but it can be trickier, with higher interest rates. Here are 5 tips to improving your credit file:
#1 – Existing debt: If you want to apply for a loan, you will need to consider any existing loans that you have. Any loan on your credit file should be up to date with repayments. Any late payments won’t look good, so address these issues if you can. Totally money says, “Whether it’s for a loan, mortgage, credit card, or even a phone bill, a late payment (or worse, a missed payment) is a definite no-no if you want a good credit rating.”
# 2 – Let go of past financial links: For example, you may have an old joint credit card with an ex partner. If you’re no longer using it, make sure the lender knows this. Sever any unsavoury ties and close old accounts that are stagnant or have been sitting empty.
#3 – Be stable: Lenders like applicants who have lived at the same address for a while. They like stability and will be more likely to accept your application if they can see you aren’t always darting about, changing your job or moving house. Also, make sure you are on the electoral register. They also like it when you use consistent details when applying for loans. For instance, if your name is Matthew, use that instead of Matt. Don’t change the details on various forms.
#4 – Don’t apply for too much: If you apply for a lot of loan products, your lender won’t like this. It will show on your credit report as someone who has been rejected by other lenders. Take your time to research the right loan and apply for it only when you know your credit file is ready. Make sure you always use a reputable lender. Many brands are now offering flexible options which might better suit you – so ensure you get the right one. For example, the online cash advance website Wonga lets you choose your repayment date, total loan amount and the amount of instalments you wish to pay in. If you know you’ll only need a cash advance for a few days, they won’t force you to keep the loan longer than needed. This might be better for you, and therefore better for your credit file. Choose carefully!
#5 – You can correct old mistakes: Don’t worry if you have CCJs or bankruptcy on your file. Everyone makes mistakes but your credit file evolves as you do, and within a year you can make dramatic improvements to your credit file. You have to stick at it, though. It can be difficult, but with the right mind set, you can create a glowing credit file that will make your lender very happy.
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