What is a Credit Score? This is the score that the bank or building society places against you to see if you are worthy of being given credit. This could be for a mortgage, or a loan, purchasing a large item on finance or maybe even to open a cash ISA account (click here for more details on this). Whatever the reason a poor credit score can mean that you are refused the amount you require, but that is no need to give up hope, there is plenty that can be done in order to improve your credit rating.
1. You can check your credit rating at any time, this may be useful if you have been given a poor credit rating and you are unsure why. It could highlight any mistakes recorded.
2. If you have checked your credit file and still been given a poor credit rating then stop applying for credit. Every time you have a credit check made it leaves a "footprint" for others to view. Too many refusals will hinder your score.
3. You must make sure that you are registered on the electoral roll at you present address. This gives you stability and is in place to limit fraud.
4. If you have any CCJ's (County Court Judgments) that have been settled then make sure that this is registered on your credit file, as this will help improve your credit score.
5. Your credit activity is important. This is the number of times that you use your credit cards or store cards. If you do not have any credit cards then this can go against you as you are placed in the higher risk category as you have no history of paying credit back. Try never to default on a credit agreement as this will go against you in your credit score.
6. Avoid having high balances on your existing credit cards, never only pay off the minimum amount required always try to pay off as much as possible to lower your risk factor.
7. If your home situation has changed, you have become divorced or been made redundant and this has affected the way you deal with your money then let the credit company know, they will consider this as exceptional circumstances and it will be noted on your file.
8. Set up Direct Debits where possible to ensure that early payment is made, also close any bank or building society account that are no longer in use.
9. Some banks or building societies will take into account how long you have lived in the UK and your income, if you are relatively new to the UK then you may have to wait a while before you are able to get credit.
Stick to these rules and you will not be classed in the poor credit rating. It is important to try and keep you credit score as high as possible and be seen as a strong candidate for credit.