How to improve your credit rating

Your credit rating is one of the most important tools that finance companies will use to lend money to you. There are three credit rating agencies in the UK:

Equifax

Experian

Call Credit

Their job is to give banks and financial institutions an understanding of how likely you are to pay your bills on time and to repay any borrowing. It is important to have a good credit rating because it allows you to get loans and credit cards at lower rates (Meaning you pay less interest on you money you borrow).

The higher your credit rating, usually, the lower interest rates you get and vice versa.

There are a number of ways that you can improve your credit rating:

1) Update your address to the current one. - This is vital because your address is used to create a paper trail for you. It makes you look more reliable to lenders.

2) Pay all of your bills on time. - Your credit rating is essentially an account of how well you pay your bills on time. So, the better the rating the better you are at paying your bills. Paying them on time increases your credit rating.

3) Do not borrow more than your credit limit. - Borrowing over your credit limit will show that you cannot manage your money wisely. So try not to spend over your limit.

4) Update your details on the electoral roll. - With your address updated, the electoral roll will show the government where you reside, and so banks can use this to lend, knowing that you have a stable address to communicate with them.

5) Check your credit rating once a month. - I check my credit rating once a month, this is an important practice because it is key to understanding if you have any issues with credit such as late payments and such. You also have the opportunity to check this and raise any issues that occur.

If all of these steps are done correctly, your credit rating will increase over time.

Thanks for reading again,