What Affects Your Credit Rating?
It is important to be aware of what affects credit scores before applying for credit. Our guide gives you an overview of how the credit scoring system tends to work between credit reporting agencies.
Credit rating system
When you apply, some of the things that influence the credit scoring system include:
how many children you have
a history of your credit accounts
mobile phone contracts you have had
What Affects Your Credit Rating?
Confused About What Affects Your Credit Rating? Here are some tips for understanding the credit scoring system and improving your credit score that you may not have thought of before.
Register to vote
Your political leanings have little to do with your credit rating, but the fact that you are registered to vote does have an impact on your rating. Being registered to vote gives lenders proof of address. To register, contact your town hall or visit aboutmyvote.co.uk.
Close any other accounts you may have
The credit companies want to make sure that you are able to pay whatever you owe, so they look at all the other accounts. This means that they are likely to give you less if another provider is already giving you large amounts of credit.
Learn more about the possible effects closing old credit card accounts could have on your credit score.
Don’t make too many credit requests
Pay attention to the number of requests you make, as it affects your credit rating.
For lenders, a person who applies for a lot of credit is likely someone who isn’t getting the credit they need – which doesn’t look good on your record, so check the minimum eligibility criteria before applying. .
Keep control of your refunds
A missed or late payment stays on your credit report for at least 3 years. Even if you simply forgot to make the payment, lenders might assume that you are not trustworthy enough to lend the money. Talk to your existing lender if you feel you are unable to maintain your repayments.
If you think you can, but it just gets overwhelming, consider getting a credit card balance transfer to consolidate your debts on a single card that could allow you to pay off your debts without interest over a long period.
Try not to move too often
Lenders trust those who keep moving less. When you apply for credit, you will be asked to provide the addresses where you have lived in the past three years. Your credit report also lists the addresses to which you have been linked.
It’s also worth checking the report and your claim for typos and consistency, as any inconsistencies could damage your credit score as well.
Close all joint accounts that have bad credit
If you have a joint account with someone who has bad credit, it can affect your ability to get credit. The reason is that lenders may assume that your partner could be influencing your income at any time.
It is important to close these accounts and settle any shared debt you may have. It’s also worth remembering that insolvencies stay on your records for about 6 years.
Try to keep your income steady
If you have a few zero hour contract jobs, the income you have could be large enough to meet the minimum eligibility criteria for some. credit card and other loan products, but the fact that it is not fixed makes it more difficult to prove that you are a reliable borrower.
Some lenders and credit card providers will make it less difficult for people with low or no fixed income, but a permanent job is always better for your credit applications.
Think twice before taking out a new mobile phone contract
Is A New Mobile Phone Contract Right For You? If you already have bad credit or are not sure what your credit score might look like, you may want to get a credit report before you take out a new cell phone contract.
Even if a network doesn’t lend you money, it will perform a credit check to see how reliable you are at paying your monthly bills on time and will want to assess the likelihood of you committing fraud.
If you still think you want a mobile phone contract, read our guide to bad credit mobile phone contracts for more information.
Ditto for a new gas and electricity contract
If you have bad credit, you might be forced to pay more using an pay-per-view energy meter rather than switching to a fixed-price gas and electricity contract.
Take the above points into account before taking out a new energy or mobile phone contract.
Get a free credit report
If you are unsure of your credit score and are considering taking out a mortgage, getting a new bank account, a new cell phone, a power supplier, a credit card, or a loan, then checking your credit report could help you minimize the potential damage from applying and being rejected.
With some credit reference agencies, you can see live data update based on your repayments and financial decisions, and also see how likely you are to be a victim of identity theft.