Whether we are trying to secure an expensive asset such as a car or a house, or we are attempting to acquire a new line of credit, we are all prisoners of the dreaded “credit score”. Also known as a “credit rating”, this is a score which provides a vendor with a quick and simple account of your current financial standing. It tells a company how well you handle debts, and lets them know whether you can be relied upon to pay them for their services or goods over an extended amount of time.
So, you better have a good credit score to buy that home, car, or get that bank loan. But what if your credit score isn’t great? Well, don’t panic, here are a few things to keep in mind:
No Blacklist: A lot of financial advisers out there will tell you about the dangers of being blacklisted, or destroying your own “universal credit rating”. The truth is, there are no blacklists, and there is also no such thing as a universal credit rating. All lender’s or businesses have their own “perfect customer” wish-list and will judge you according to that. Just because you fail to get a loan at one bank, does not mean that you will fail at another. Think of a credit rating as more of a credit report, some lenders will give you more room to breathe than others.
Profit Over Risk: Lenders are interested in profit more than they are of the risk of taking you on as a debtor. They are less likely to provide a loan to a smart debtor who has a history of moving debt around onto 0% interest cards in order to pay less in the long run. Take the middle road, do this some of the time to save money, but also make a point of paying off specific debts to raise you credit scores.
Check Your Score: You are allowed to see your own credit files. Make sure that you get a copy from two different credit rating companies. Compare both and ensure that all the information is correct. Your score could be poorer than it needs to be. Be wary of fraud where someone else has taken on debt under your name. If there are errors, you need to get them corrected. Contact the lender who is attached to the incorrect debt, alerting them to the error and asking them to fix it. If they do not, then ask the credit agencies to add a “notice of correction” next to that debt explaining that it is not yours. Depending on your region, there will be a free service in place to help force creditors to change this in the long term.
Change Your Score: Take active steps to increase your credit rating. This can include: Closing unused bank cards to minimise the chances of fraud; don’t make too many lending applications over a short space of time as it makes creditors nervous; make sure all of your debts are registered to the one address; put a land-line number on all applications as it encourages lenders that you are in a stable living arrangement; finally, make sure that you are on any electoral role as it can be difficult to get credit without this.
These are just some things to keep an eye on when dealing with your credit score. There are plenty of ways to boost your credit rating, and make sure that you do not hire any “credit repair” company to do so, as you can do everything they can, for free!