How to Improve your Credit Rating

Your credit score is a made up figure that allows companies to determine how much of a risk you are. A person with a low or bad credit score is considered to be riskier to lend money to when compared against someone with a high credit score.

improve credit rating

Incredibly, a low credit score can be achieved simply by having never taken out any credit. In other words, you have no credit history whatsoever. You may think, shouldn’t this mean I have an average credit score? Well, no, it doesn’t. The majority of people who take out credit do pay back what they owe on time. Thus, most people tend to have more positive marks than negative. So, having no marks at all means that you credit score is slightly below average.

Imagine it from the bank’s point of view. If you have never borrowed money before, they have no idea whether you’ll be a high or low risk customer. Either way they are taking a chance and quite a few banks don’t like doing this. Furthermore, some people with a low credit score may find themselves getting approved for credit more often that someone with no credit history.

What does it mean to have a Bad Credit Score?
In order to get a bad credit score, you must have quite a few negative ratings or maybe just one very big one! As such, it is important to check and see what’s on your credit report as you may find that something as simple as an incorrect address, or a missed payment that you weren’t aware of. Rectifying mistakes is the first step to improving your credit rating. The next is managing your finances in a more sensible manner by not borrowing if you can’t afford to pay it back. Obviously, most people know these things but it’s amazing how many people still try to take out a loan when they don’t really need to, and more importantly, can’t afford to.

How do I get my Credit Report?
There are 3 main companies where you can get your credit report from, Experian, Equifax and CreditExpert. Make sure you check all of your details including past addresses, your name, and any missed payments. You have the right to get this information changed if it is incorrect!