5 Things Clever People Know About Their Credit Rating
Whether you’re looking to arrange a credit card, a mortgage, loans or car insurance, your credit rating can make a big difference to the deal you can get. However, if you know how credit scoring works, then you can do things to help improve your score. Read on for five things that you need to know about your credit rating.
- You Have More than One
There’s no such thing as a universal credit score. Each lender has its own “perfect” customer wish-list that they’ll compare your application to. This may be different from one lender to the next. A poor credit score is not the end of the world; it just means that you’ve got to find the right lender for you.
- Don’t Shop Around
With anything else, the top tip is to shop around to get the best deal. However, when it comes to applying for credit, it’s the opposite. The more you apply, the less chance you have of getting credit, and it can have a negative effect on a future score. This is frustrating if you’re rejected, or you’re offered a poor rate. It does mean that you should think carefully about applying for credit at any time.
- Check Your Credit Files
The three main credit reference agencies Equifax, Experian and Callcredit all have credit files on you. Before you apply for credit, you should check your credit files for errors, including:
- Check addresses on old accounts
- Cancel unused credit and store cards
- Make sure that you’re not financially connected to old partners
- If there is an error, dispute it.
The credit file companies can have different records, so it’s important to check each one at least once a year.
- Lenders like Stability
The longer you’ve spent at the same address, with the same employer and the same bank account, the more favourable a lender will be. Things like being a homeowner instead of a renter, or being employed instead of self-employed can have a big impact on the way a lender looks at an application. The more stable that you look, the less likely it is that you’ll default on payments.
- Think Carefully Before Linking Finances
Joint finances can affect your credit score. If you and your partner, friend or parent have a joint mortgage, loan or bank account, then both of your credit histories will be looked at.
So, if one of you have a bad credit score, then avoid linking your accounts. As in point number three, if you are linked and you split up, make sure that your finances are delinked by writing to the credit reference agencies for a “notice of disassociation.”
With this info giving you a savvier outlook on credit ratings, you could start to improve your own rating. Whether you’re looking for a mortgage or a credit card, thinking about these points could make it all a lot easier.
Darcie is a content writer at motor finance 4u, a car finance company that strives to find the best deal regardless of your credit score.