When it comes to applying for credit, your credit score is going to be the most important element. This is why you need to be aware of what your credit score is and the impact it can have on your life.
There is no universal credit score
It is important to be aware that there is not a single credit rating that applies to an individual. This means that different lenders will view you and score you differently, so you may be successful when applying to one lender but with all other things being equal, another lender may refuse your application.
This can be frustrating because you can never be 100% convinced that you will receive approval for an application. However, while each company can make their own decision about your application, it is likely that there will be general agreement.
There is no sure-fire way to improve your credit score
While there are a number of things that you can do to improve your credit score, not everything will have the same impact for different lenders. This follows on from the fact that there is no universal credit score and different lenders will apply their own weightings to certain aspects and elements.
However, there are a number of steps you can take that most lenders and reviewers will approve of, including:
- Show stability – place your landline number on applications, not a mobile number
- Don’t get payday loans or withdraw money on credit cards – this is an indicator of poor money management
- Don’t be late with payments – make sure you set up a direct debt (even for the minimum payment and then top up payments) to ensure you never miss a payment
- Check for errors in your address – an old or incorrect address could cause an application to be rejected
- Be aware of timings – an application for a product stays on your record for one year while major issues like bankruptcy, defaults or CCJs will remain on your account for 6 years
Make sure you are on the electoral roll
Different people will have plenty of reasons to avoid being found on the electoral but no matter these reasons; there are many positive reasons to be found on the electoral roll, including the positive impact that being found on the electoral roll can have on your credit score. As intimated earlier, stability is of benefit when people look at your credit score and history, which is why being found on the electoral roll is very important.
Examine your file
It may be that there are things on your credit score that aren’t true or are no longer valid. Mistakes can happen and just because something is logged on to your credit score doesn’t mean that it is true. However, if mistakes and problems are not checked or flagged up, they will remain in place and the longer they stay online, the more likely it is that they will cause you issues.
The three main credit reference agencies, Callcredit, Equifax and Experian provide users with the chance to check their credit score for a small fee, and this is something that can pay dividend in the long run. You can also look into free trial options that will provide you with the chance to check your file in order to minimise any issues or problems that may impact on a credit application you make.
Do not make a number of applications in a short period of time
Every time an application for credit or a loan is made, there is a footprint left on your file. When there are a number of footprints, particularly in a short period of time, you will find that these will be noted by the lending companies and if there are too many, this will work against your application.
If you are looking to apply for an important piece of credit, it is best to ensure you have a few months where you don’t apply for any form of credit.
If you find that your credit score is impacting on your ability to obtain credit, a guarantor loan may provide you with the short term solution. A guarantor loan will not negatively impact on your credit score but paying it off on time can help you to improve your score in the long run.
Andrew Reilly is a freelance writer with a focus on news stories and consumer interest articles. He has been writing professionally for 9 years but has been writing for as long as he can care to remember. When Andrew isn’t sat behind a laptop or researching a story, he will be found watching a gig or a game of football.