Each lender provides a credit score to a consumer based on its criteria for an ideal customer. A good credit rating opens the door to new credit cards, loans, mortgages, and other forms of credit.
A bad rating keeps these doors closed and throws away the key. It is not difficult to increase your credit rating when you know the most effective techniques. By boosting your credit score, you can enjoy a better lifestyle.
Credit scoring systems vary between credit products and lenders
They typically consider the credit application, past experience with the lender, and credit files from the three UK credit reference agencies, Experian, Equifax, and Callcredit.
The application reveals important details about family size, salary, homeowner status, postcode, and reason for the credit request.
Credit reference agencies compile information from the electoral role, court records, and current and prior lenders as well as energy and phone providers. By the end of 2012, rent payments may appear on an Experian credit file.
Not all credit-related information is included on a credit report.
Missed payments, defaults, and discharged bankruptcies drop off the report after six years and declined credit applications are not listed.
Only pre-1998 mortgage-style student loans are included on a credit report.
The modern student loans that are paid through the tax system are not displayed. Credit scoring systems are not published and adding to the confusion is the fact that one lender may reject an application for credit, while another lender will approve it.
By reviewing their credit reports, UK consumers gain an understanding of what lenders review when making credit approval decisions. They can increase their credit rating by addressing weak spots on the report. Getting on the electoral roll is a good first step for those who do not have any credit.
To build their scores, they can then get a credit card and repay balances in full by the deadlines
Repaying credit card balances within the initial statement period is also a credit repair technique.
Just one or two late or defaulted credit payments can negatively affect a credit score for years. Infractions within the prior 12 months are the most detrimental. Consumers who are struggling to make credit payments should contact their lenders to see if accommodations are available.
If a spouse or flatmate has poor credit, keeping finances separate is a good idea
Applying for too much credit within a short span can damage the credit score so consumers should time their credit, auto insurance, and mobile phone applications. Remaining employed and staying at one residence for a while can help improve the score without much effort.
It is best to apply for new credit before moving or taking maternity leave.
Consumers should review their credit reports regularly to verify that information is accurate and updated. If an account is active but reflects an old address, the address should be updated to streamline ID checks for new credit.
Unused credit cards and other credit accounts should be canceled because this reduces the amount of available credit, making new credit easier to obtain.