Your credit rating is vital to your financial health
Having a good credit rating’s essential because it can help you with everything from getting a good deal on a loan to being able to get approval for a mortgage.
When you apply for a credit card, store card, hire purchase or a loan, most lenders go to credit reference agencies to see if you have a good track record for paying money back and paying bills on time.
Credit reference agencies put together credit histories using lots of sources, including the electoral roll and county court judgements. Each time you take on more credit, it leaves a record. A credit rating tells a lender how likely you are to pay back a loan.
If you’ve never taken out credit before, it can be difficult to get a loan. So the more loan repayments you’ve successfully made on time, the better your credit rating’s likely to be. Although the reports from the credit reference agencies are very important, the decision on whether you get a loan is made by the lenders.
Tips on improving your credit rating
Creditbuilder helps prove to lenders that you’re creditworthy, and improves your chances of being accepted for credit in the future. Here’s how you could boost the positive effects that Creditbuilder can deliver:
- Pay your bills on time
- Make up any missed payments as soon as possible
- Don’t keep on reapplying for credit if you’ve been refused – it can damage your rating
- Make complete and correct credit applications. Missing or wrong information reduces your chances of getting credit
- Make sure you’re on the electoral roll
- Check any court judgement information is correct
- Add a brief explanation to the information held by credit reference agencies (such as why you missed a repayment or went overdrawn). Any future lender will then see why you might deserve a chance
If you’ve been turned down, check your rating
If you’ve been refused credit, ask the lender for the name and address of the credit reference agency that provided information on your credit history. You can then write to them and ask to see what’s on your file.
Please remember to :
- Send a cheque or postal order for £2 made payable to the credit reference agency (this won’t be returned)
- State your full first name, surname and address including the postcode
- Give any other addresses you’ve lived at during the last six years (This helps the agency to trace all the information it holds about you)
The agency must reply within seven days. It’s a good idea to keep copies of any letters that you write and to have proof of posting, such as a recorded delivery number just in case there’s a disagreement about your file.