A poor credit rating can affect the rate of interest you might be able to get in the future for things such as loans, mortgages, or credit cards. If your credit rating is bad enough, you may struggle to borrow at all. Don’t panic though, as there are ways of improving your credit rating.
Find Out What Your Credit Rating Is
First of all, find out what your credit rating actually is by applying to see a copy of it from a credit rating agency. All companies who are going to assess you for credit will look at your credit file to determine the risk of you not paying the money back. They will make their lending decision based partly on this information. Once you have received a copy of your report, you know what companies are looking at when they assess you and how likely it is that you will be able to borrow. Once you know what you are dealing with, you will be able to take action if necessary.
Check Your Outstanding Debt
Once you have your credit report, look at it and see how your credit breaks down. Missed payments and unspent court orders for money will have a huge bearing on your overall credit rating. If you can afford to, make sure that you have made up any of these. Don’t worry if you can’t afford to do this straight away. Contact any companies you have missed payments with and ask to set up a repayment plan. That way you can at least start to improve your credit rating.
Get Some Credit
This may sound odd, but if you have never had any credit before, your score will be low. This is because a rating agency doesn’t have anything to assess you against as you have no credit history. Taking out a small personal or business loan will give you a credit rating. You could even take out a credit card and pay it off every month if you do not like the idea of having outstanding debt. Showing that you can manage money will improve your credit rating
Limit the Amount of Credit Searches You Have Done
Companies will carry out a computer-based credit search before they offer you money. This will offer a score based on many things, including how many credits searches you have had done recently. If there have been a few, even if you have not taken out the money then the computer will score you down and you may not be able to borrow. If you are comparing rates, it is best to select one company and then apply and have the credit search done rather than apply to many simultaneously as this will affect your credit rating. These searches will stay on your file for six months.
Don’t worry if you have a poor credit rating right now. Take these easy steps and you will be able to improve it over a short period of time.