How to improve my credit rating

 

 

Man checking his credit rating

7 ways to help improve your credit rating

What is a credit rating?

Credit ratings are used by lenders to understand more about the credit history of an applicant. Your credit rating changes over time as your financial circumstances change. At Cash Converters, we use this credit rating information as part of the decision making process when you apply for a Personal Loan.

How are credit ratings calculated?

Credit ratings are generally a score between 0 and 1200 and are grouped into five categories from ‘excellent’ to ‘below average’. The score is calculated by the credit rating agency based on a number of factors:

  • Your personal details including your age.
  • The types of credit you have applied for including mobile phone accounts, electricity and other utilities accounts, personal loans, credit cards and mortgages.
  • The amount of credit you have borrowed.
  • The number of enquiries on your credit file.
  • Late payments or defaults on credit provided.
  • Any debt agreements or personal insolvency agreements you have entered into.

How can I improve my credit rating?

  • Aim to always pay your bills, rent and loan repayments on time. Even paying your gas or electricity bill late can affect your credit rating.
  • Consolidate debt wherever possible including credit cards.
  • Lower credit card limits.
  • Limit the number of enquiries on your credit file. Simultaneously applying for loans with multiple providers can have a large impact on your credit rating if they each do a credit check.
  • Equally, it’s good to have some activity on your credit file to show a track record of paying on time.
  • If you are experiencing financial difficulties, call your credit provider and negotiate a payment plan arrangement with them. This can prevent a default being listed on your credit file.
  • Identify any areas of concern on your credit file and aim to fix these. There may be an outstanding debt you are unaware of or there may be errors on your file. Once you have identified these, you can either have the errors corrected by contacting the ratings agency or the credit provider or you can aim to settle any outstanding debts.

How do I get a copy of my credit report?

You can obtain a copy of your credit report through the following ratings agencies:

Free credit reports are often available in limited circumstances or once every twelve months.