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Is your credit rating doing you justice?

credit score_sign_27_07_12They’re critical for your fiscal health, so make sure your credit rating is doing you justice…

Whenever you apply to a lender, your credit rating will come into play. Although it’s important and may seem bewildering, don’t shy away from checking yours regularly… Getting started

Credit ratings: they can be the make-or-break when it comes to securing a mortgage or credit card but what are they? Your rating is determined by various resources, including your application forms, past dealings with the lender, as well as external credit rating agency scores. These agencies evaluate your credit-worthiness, in other words, how likely you’ll be to miss a payment or not pay back credit.

The criteria that companies lay out for their ‘perfect customer’ can vary greatly between organisations, but if you wish to borrow from them, you will need to jump through their particular credit rating hoops. A bank, for example, will want to evaluate how savvy their customers are, because if they pay everything back in full, the bank risks not making any money from them, so being aware of this when it comes to your rating can help you adjust accordingly.

Regular checks

Checking your credit files is essential to ensuring your rating isn’t affecting your ability to secure a loan (this is particularly important if you’re wishing to take out a mortgage.

Carrying out periodical checks will make sure no unwanted or unexpected details are lurking, because even something seemingly insignificant could have a negative impact on your rating. You have the right to see your credit files for £2, but some companies – such as Equifax ( – offer a free check. These assessments should be carried out yearly as part of your financial health check or before making large applications.

If you find errors on your credit file, fear not. These can be removed quickly and easily through simply writing to the credit agency and asking them to be taken off. The agency may refuse to delete the detail, but you can add your own comment to qualify the error.

Boost it

If you’ve got a bad credit rating there are plenty of ways to improve it:

Register to vote
It might be surprising to find that not being on the electoral register can prevent you from securing credit from a lender. While this has little to do with voting itself, the register is a valuable resource for credit-checking agencies who use the list to affirm identity. If you haven’t registered, do so now at:

Keep up to date with bills
It may sound very basic, but a day-late credit card payment or a missed phone bill can have a major impact upon your credit rating. If you think you’re going to default on payments, contact your lender to find out whether a more manageable repayment schedule can be arranged. Do all you can to avoid missing payments; mark dates on your calendar to help you keep track.

Do you need a quotation?
When you request a quotation from a lender, they frequently use a credit search as a default setting which will go through to your credit file. Assess whether you’re likely to go ahead with the product, if not then it may not be worth getting a quote. If you do want to proceed, ask the lender to carry out a quotation search instead.

Do a check-up
If your application is rejected, before you go somewhere else, go back and check your credit files again. By going over this application-rejection process, your credit rating will become increasingly poor. Find out which agency your lender used and contact them to find out the reason for your rejection and to see whether there’s anything they’d recommend to improve your rating.

Words: Jessie Bland

This article was first published in at home with Sarah Beeny in August 2012. [Read the digital edition here]

Picture credit: Shutterstock

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