"Explorations of the Credit Office

How good is your credit score? With an estimated one in four UK adults having some sort of adverse information on their credit file, it may not be as good as it could be. However, with almost all banks and building societies now using credit scoring to decide whether to grant you a loan or credit card, having a good credit rating has never been more important. Here are a number of easy ways to improve your credit score.

Make sure you are on the electoral roll

Finding an applicant on the electoral roll is one of the basics of credit scoring. So, you need to make sure you are on the electoral register and contact your local council to update them if you are not.

Associate with the right people

If you are financially linked to someone on a loan, account or credit card it can have an impact on your credit score. If the associated party has a poor credit rating and you have joint accounts, it can have a knock on effect on your own credit worthiness. When you separate from someone with who you have joint accounts, write to the credit reference agencies requesting a notice of disassociation to stop their credit history affecting yours in the future.

Do not ignore defaults

If you do have defaults on your credit file but you feel they are unfair, you can make a complaint and ask for them to be removed. Speak firstly to the company who registered the default, and, if their response is unsatisfactory, complain to the Financial Ombudsman.

Apply for credit one at a time

If you apply for lots of credit simultaneously, your credit score can be damaged. Lots of credit searches (the notes that are left on your credit file when you apply for loans or credit cards) in a short space of time can damage your credit rating. Apply for one card or loan at a time.

Make sure you build a credit record

Applications for credit in the UK are more often declined for thin credit than bad credit. Thin credit means that there is simply not enough information on you on file for a lender to make a decision. So, make sure you have some form of credit and manage it responsibly. You can then build up a good credit record from scratch.

Stability is vital

Lenders will generally look more favourably on your credit application if you can demonstrate stability. If you hold down a job, own your own home and pay into a pension you will generally obtain a higher credit score.

Do not miss a payment

Information remains on your credit file for up to six years. This means that if you do miss a payment on a loan or credit card, you can damage your credit rating for a long time. Always try to make the minimum repayments on any credit that you have and try not to miss payment deadlines.

Repay your borrowings

When credit scoring an application, lenders often takes the total amount of credit you have into account. If you can reduce your total borrowing, you are likely to make your application look more attractive to new lenders. This should help you improve your credit score.

Regularly check your credit file

Experts often recommend checking your credit file on a regular basis. By doing this, you can correct any errors and make sure your information is always up to date and accurate. It also makes it much less likely that you will be refused loans or credit cards, damaging your credit score.

Following these simple steps in life will not only keep you in financial health but should also help instil financial discipline which in turn helps your credit circle and hey presto! A virtuous circle of stability is formed, it is good for you and it is good for your family.

About the Author:

Howard writes for Just Commercial Mortgages the UK's No1 site for the latest commercial mortgage rates and commercial property finance news.

Article Marketing

22 people like this article