Personal Finance Possible ways to improve your credit

rating

Credit Rating: What does

it mean?

• Your credit rating

is a way for banks

to evaluate the

risk of lending you

money

• It evaluates your

creditworthiness

• It is based on your

ability to manage

your debts and

finances Photo by 401K via Flickr

Why should I care about

my credit rating?

• If you are applying for a 0 balance transfer credit card, a mortgage or even just a loan to buy a new car or something as small as a laptop, your credit rating is consulted

• Your credit rating could be the difference between a yes and no to all the above things

Photo by 401K via Flickr

Possible ways to improve

your credit rating #1 Get yourself a credit card

• People often steer away from credit cards, knowing that

you have to pay interest on payments. However not

having a credit card can negatively effect your credit

rating

• Credit card companies and banks do check your credit

rating when you apply for a credit card but it is a very

basic evaluation

• Using a credit card properly will show lenders that you

are capable of borrowing and paying back a small

amount of money and will kept to secure bigger loans

Possible ways to improve

your credit rating #2 Pay your bills on time, every time

• Missing payments negatively effects your credit rating

• Watch out for gas and electricity & TV licence payments – these are more than often checked

• Try to pay as many

bills as possible by direct debit, this ensures you don’t miss the payment

Photo by 401K via Flickr

Possible ways to improve

your credit rating #3 Don’t max out your credit card

• We all know how tempting it can be to max out your credit card,

those new pair of shoes are calling

• This might show the lender that you are impulsive and that you

are pushing your limit

• It is suggested that you stay 30% below your limit unless there is

an emergency, no matter if you pay it back in full every month or

not

• This shows that you are able to balance your credit, and paying

it back in full every month again shows your ability to manage

debt and thus improving your credit rating

Possible ways to improve

your credit rating #4 Regular check ups

• Keeping tabs on your credit rating means you can iron out inaccuracies with your finance history

• You can get a credit report from credit reference agencies such as Experian. They also have a handy credit rating quiz to establish a quick credit rating prediction before you apply for a report.

Photo by Images_of_Money via Flickr

Possible ways to improve

your credit rating #5 No means no

• It is recommended that if you have been turned down for a credit card

or any kind of loan you should stop applying

• Continuously applying and being turned down can have a negative

impact on your credit rating