Your credit score can be a hard thing to understand.
With three different credit reference agencies in the UK each with their own credit rating on you, its hard to know what can actually impact your credit rating.
The following steps whilst not exhaustative, will help make sure you have a better chance of securing that mortgage or bank loan.
1) Contact each credit reference agency (Experian, Equifax and Callcredit) and establish what your scores are and make sure they have you on record. If they don’t, then you won’t be getting that mortgage application approved.
2) Use credit score applications such as Clearscore, Experian and Noddle to monitor your score. The best credit score application that provides you with the most advice is Clearscore – make sure to check out their tutorials!
3) Get a credit card – One of the best ways to increase your score is to open a credit card and ensure you pay back your spending every month. Having that card and making timely repayments will demonstrate to lenders you payback on time. Increasing your credit card limit also can have a positive impact – ask the credit card company when you will be able to increase yours
4) Be the billpayer – If you have your name attached to energy, telecoms and council tax bills you are further demonstrating to lenders you are able to make repayments and this will be on your record.
5) Register where you live with your local council. Council records are used by credit reference agencies. If you have not registered with your local council, then there will be a gap on your record which could go against you. Check your local councils website on how to register to vote and make an application.
6) Switching services can have a short term impact on your credit rating. If you are switching bank account or telecoms providers there may be a ‘hard search’ against your credit file – these tend to last for a maximum of six months on your file. Always check the small print or ask the service you intend to switch to, as to whether they will perform a soft or hard search on your file.
7) Always make sure when applying for credit that you will be approved. When applying for any credit make sure there is a good chance you will be approved. An application failure can have a significant negative impact on your score and prevent you from applying for credit for a year. Some credit agency applications have probability scores (Example – 80% successful) to help determine whether you will be granted credit for different products – look at these and make a decision based on your situation.
The world of credit scores is complex.
However with the steps above you can begin to take control and monitor your credit score; whilst improving your chances of future credit success.