Your credit rating could have an impact on most of your future financial decisions. Whether you’ve recently been turned down for credit or are thinking of making an application in the near future, it’s worth knowing how to improve your chances. This could make life easier when you next apply for a credit card, loan, car or mortgage.
Take stock of your situation first
- Keep up to date with all payments
Late payments tend to smirch your credit report for up to 6 years, so it’s important to make sure all your credit card and loan payments are on time.
- Are you on the Electoral Register?
Lenders always check if you’re on the electoral register to verify your current and previous addresses. To get on the register, simply get in touch with your local council.
- Order your credit report
Since most lenders use information held by credit reference agencies when deciding whether or not to lend to you, you should know what they are looking at and check that it’s accurate.
The largest credit report agencies in the UK are Experian and Equifax. It’s worth checking what information both hold about you, as it may differ.
Visit Experian’s website
Visit Equifax’s website
- Managing your finances with flexible payments
Credit cards differ from other types of credit, such as loans, in that you don’t have to pay a fixed amount that’s arranged upfront.
You could choose to pay the minimum, although it takes longer to pay off the balance and you’re charged more interest in the long run. Or you could pay more, up to the full amount of your balance. The choice is yours.
- Dispute incorrect information on your credit report
If you spot a mistake, get in touch with the credit reference agency so they are aware of the inaccuracy. Regularly checking your credit report is also a good way to monitor if you’ve been a victim of identity fraud.
- Add a statement to your credit report if your situation has improved
Perhaps you were a student when you fell behind on payments in the past. Or you’d been made redundant and were between jobs. Adding a statement that explains why your credit report is less than pristine may help lenders understand that your bad patch was temporary.
- Pay any outstanding amounts you owe
If you pay off unpaid credit or CCJs, your report will show that they’ve been settled. Although they continue to appear on your report for up to 6 years, lenders may see their payment in your favour when considering if they should lend to you.
Be honest when you apply
Make sure all your details are accurate, even if they paint a less than rosy picture of your credit history. If you try to falsify information, your application will be denied and may even be treated with suspicion.
If your application has been turned down
Every time you make an application and a lender checks your file, a hard footprint is left on your credit report. More than a couple of these footprints in a relatively short space of time could lower your credit rating and make lenders extra cautious about offering you credit.
So if you’ve been denied credit, don’t keep reapplying. It’s wiser to wait at least 3 months before you try again.