Your Credit Score
When you apply for a bank account, credit card, personal loan, mortgage or hire purchase agreement, the lender will run your application through a credit scoring system. Credit scoring works by awarding points (or deducting points) according to the answers you give on the application form.
Debt Consolidation And Credit Although it is very unlikely a lender will reveal exactly how they score a credit application (due to the fact that it might encourage people to give false answers to boost their score) there are general rules that apply to almost all applications. Owning your own home or having lived in your current home for a long time helps, as does being in the same job for a long time. Being married often works in your favour, but having children has been known to work against you. Having a new or no bank account will look bad. Basically, lenders are looking for settled, stable and responsible applicants as they are statistically less likely to default on a loan.
Check Credit Rating 5 things that will kill your Credit Score
How To Improve Your Credit Score If you apply for mortgage finance, you do not know if you will get approved for the loan and what the percentage rate will be. Both of these depend on your credit score. The better you credit score is, the higher your chances of an approval at a low rate. Credit scores are based on the information in an individual's credit report. Lenders use credit scores to evaluate the potential risk posed by lending money to consumers
Improve Credit Rating
1. Electoral Roll
Not being on the Electoral Roll can severely hamper any application for credit. Make sure your details are up to date if you have recently moved house, etc.
Because each bureau can and does receive information from different banks and creditors, your credit score (also referred to as "FICO score") can differ from credit bureau to credit bureau. While credit scores themselves range from 350 to 850, a FICO score of 700 from Experian is generally considered the equivalent of a 700 FICO score from Equifax or TransUnion. Regardless of which bureau supplies your credit report rating, the higher your FICO score, the better your chances are of securing a loan, with a favorable interest rate and ultimately having a stronger more solid credit history.
Credit Online Rating Report 2. Poor Credit History
Up to 35% of your credit score will be accounted for by your previous credit history. CCJ's, defaults and late/missed payments will all stay on your credit file for 6 years, but a sustained period (around 12 months) of regular payments will help to counterbalance the negatives.
• Try not to exceed 30% of your credit card’s credit limit. Large credit balances can cause your credit score to drop. Credit scores are statistical scores based on your credit report that predict the probability of your defaulting on your credit obligation. A good credit score can be helpful to obtain more credit when you need it and at a lower interest rate.
Credit Score Rating Scale 3. Time at current address
If you have lived at your current address for less than 3 years, your credit score will be adversely affected. This is especially true if you are a tenant. The more addresses you have had in the 3 years, the greater the negative effect will be.
Checkmyfile.com warns consumers about to move home that applying for credit after the removal van has arrived can cost them dearly in higher interest rate charges. Barry Stamp, Joint Managing Director of the UK's market leading online consumer credit reference agency, says, "Moving house can cost people hundreds of pounds in extra interest charges because their credit score will reduce automatically when they temporarily drop off the electoral roll, and other important factors in the calculation of their credit score change significantly."
Bad Card Credit Credit People 4. Too many credit applications over a short period
Each time you apply for credit (any credit), a search will be made and recorded on your credit file. If you are seen to be applying unsuccessfully to too many lenders in a short space of time, your credit score will be affected negatively. Try not to make more than 1 or 2 applications a month.
Free Credit Rating Report 5. New Job
Lenders are looking for continuity in your employment record, so being in the same job for a long time will give you the best credit score for this section. 2 jobs in three years need not make too much difference, especially if it can be shown that you changed jobs for a pay increase. Periods of unemployment between jobs will also look bad to lenders.
Credit Rating Scale About the Author
Bad Credit Rating This article was written and supplied by Finance Extra, the place to find free personal finance advice.
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