Bad credit score?
Having a good credit score or credit rating as it’s also known, is essential for any finance or mortgage applications. Especially if you want access to most of the high street lenders. With that being said, if your rating is low then you can still get access to mortgage schemes so don’t despair.
Checking your credit score is free online and with most companies offering a free trial of some sort there’s no excuse for not knowing what your personal credit score is. Always remember though if you take up a free trial offer to cancel it before any membership payments are deducted from your bank account.
Always remember also there will be a delayed period where any work to improve your score will take effect. It won’t happen overnight and can take up to 3 months sometimes to be reflected in your new score.
Lenders use the information on your credit report to decide 3 things:
- If they can lend to you.
- How much to lend you.
- What interest rates to charge you.
Building up your credit score takes time, so if you are planning on applying for a mortgage in the future it’s a good idea to start now if you need to improve your score. Negative marks tend to stay on your file for 6 years. After that everything is deleted from your files.
There are a number of things you can do to help improve your credit rating, below we have outlined the main ones.
If your names not on the Electoral role it can be much harder top get a good credit score. You should make sure you do this every year, it’s free and simple too. The GOV.UK website will tell you all you need to know or you should get a reminder from your local council.
Check for Mistakes
Once you have your credit report always make sure you go through it to ensure there are no errors such as incorrect address or wrong names. If you do find something always make sure you contact the relevant people to correct this asap because this can directly effect your credit score.
Pay Bills on Time
Showing you pay on time each month is a great way to install confidence in lenders. Things like mobile bills, gas bills, car finance and mortgage payments being paid on time show you can manage your finances accordingly. when you look at your credit score you can see whether you have missed any payments and not realised. This can effect getting a mortgage so it is best to check.
Check for Fraud
Maybe your cards have been cloned or someone used your details to apply for something, always check every application. Somebody could have applied for credit in your name.
One of the main reasons for being declined credit is having CCJ’s on your file. Always try avoid getting to this stage in the first place and receiving the CCJ. If you do get to this stage then they stay on your file for 6 years. The bigger they are, the newer they are and whether they are settled can make the most difference to your mortgage application. You would need a bigger deposit to offset this.
Any outstanding debts on your file will always be a concern for potential lenders. Always try pay off or reduce these debts as best you can. Even having a repayment plan will help your credit score so contact the companies you owe and agree an affordable repayment plan.
Avoid Repeated Credit Applications
The more credit report searches you have on your file the more lenders frown upon this. This goes for when you yourself search for your credit rating, so always carry out one search. Avoid applying for credit on multiple occasions. If you have applied for finance somewhere and been declined chances are you could be declined elsewhere and the more you apply the more damage you are doing to your credit rating.
The best thing you can do is check your credit score to see where you rating is.
CheckMyFile is the UK’s only multi agency credit report. Try it FREE for 30 days, then just £14.99 a month – cancel anytime.