One of the reasons that a lender rejects loan application is low credit score. But, what is a credit score and how do you get a low or high score? A credit score is a numerical value that describes the likelihood that a person would pay back what he or she owes. In the UK, one can check his or her credit score at Experian, TransUnion, and Equifax. These agencies collect credit data that they use to come up with a credit score. A low credit score shows that one may not be able to pay back credit while a high score indicates that the person would most likely pay back a loan or a credit.
Lending and financing companies refer to these agencies to see the credit score of loan or credit card applicants. Aside from quick approval, those with high credit rating can enjoy low interest rate and easy repayment scheme. However, short term lenders are not strict when it comes to credit score or rating. Nevertheless, banks and other traditional lenders are strict when it comes to meeting the credit score requirement.
If you are planning to borrow from a bank or finance company, improving your credit score is important. Here are 8 ways to give your credit rating a boost.
Register as a Voter
Why is being a registered voter important in improving your credit rating? Your registration is proof of who you are and where you live. To lenders, a real name and address is guarantee that you cannot deny your debt or run away from it. Working on the same job, employer and having the same bank account that you used during the registration would do wonders to your credit score or rating.
Close Credit Cards, Debit Cards, Mobile Contracts, and Store Cards Not In Use
Close all credit cards, store cards, debit cards, and mobile contracts that you do not use anymore. To make sure that you get rid of all this baggage, visit the office or store personally. Making a phone call or doing the task online is not an assurance that the company involved has closed your accounts. Having a clean slate regarding unused credit cards and accounts would contribute to the improvement of your credit score.
Cut off Link with Former Business Partners
If you have had a joint bank account or a mortgage with your former spouse or business partners and you have stopped getting involved, you must inform the credit reference agencies that you are not anymore connected with the other person or persons. Taking this step is important because if you are still linked with these people, their credit rating could affect you. Their unpaid debts and financial responsibilities are also yours, and if they fail to pay them back your credit rating could also suffer.
Always Make Prompt Repayments
If you have a loan or credit card, make sure to always pay on time until it is fully paid. All your payments and your behaviour would be reflected in your credit history. Being a good payer would help improve your credit rating or score.
Use a Credit Card to Build Your Credit History
You can use a credit card to build and improve your credit history. Get a credit building credit card and use it to make small purchases. Always pay fully the balance at the end of the month. It won’t take long before you can have an excellent credit rating.
In the UK where taking a loan has become a way to get funds for an emergency or to purchase a car or a house, improving your credit score or rating is of utmost importance. Take note of the ways to improve your credit score and observe them. The next time you apply for a loan where a credit rating is part of the requirements, you would never fear rejection.