Many people give no consideration to their credit score. Some people don’t know how to find out what their credit score is or why it’s important. Your credit score one of the things that lenders look at when you apply to borrow money. This could be as a loan, a mortgage, or a credit card. However you need to borrow money, your credit rating is one of the things that the lender takes into consideration.
What Is A Credit Report?
A credit report is a document held by a licensed credit reference agency. There are three in the UK, Equifax, TransUnion and Experian. This document compiles your credit information. This includes any outstanding amounts owed, and if you usually make your payments on time. It isn’t just previous credit cards, loans and mortgages that affect your credit report. Your utility bills and any mobile phone contracts are also part of it. This information is used to assign you a credit rating, on a grading scale. The lower your score is, the more of a credit risk you are. Clearscore uses Equifax for credit reference data.
Finding out Your Credit Rating
Not many people know that you can find out your credit rating. Websites like Clear Score can help you. You are also entitled to a statutory credit report at a cost of £2. This could be a print or online version. You can add a note of correction if you want to clarify why there was a missed payment or default on any loans. If you think the information is incorrect, you can dispute it, but if it’s correct you can’t change it.
Improving Your Rating
There are some things that you can do to improve your credit rating. You can actually use credit cards to increase your rating. If you have a large balance, look for a 0% balance transfer credit card, and consolidate all payments on it. Platforms like uSwitch can help you understand how doing this can decrease any debt by hundreds, if not thousands of pounds. Even if you haven’t any credit card debt, you should consider taking out a low-interest credit card. If you use it sensibly, and always make at least the minimum monthly payment, it shows on your credit report. You can improve your credit rating much more quickly if you pay the card balance in full every month, and via direct debit. Doing this for six months will make a positive change to your rating.
Why Improve Your Rating?
Lenders look at your past financial history and behaviour to decide if they should extend you credit. If you have been refused an application for a new account, for example, you can always get a free copy of ChexSystems report https://aaacreditguide.com/get-out-of-chexsystems/ to help you investigate the reason for that and potentially resolve the issues. You will be considered to be a much safer financial risk for them if you have a good report and credit score. Improving your rating now could mean that you would be successful for future credit applications.