Credit ratings and scores are an incredibly important part of gaining access to credit facilities. Whether you need a short or long-term loan, credit card or overdraft, or you are applying for a mortgage, your credit score will have a big impact on the amount you are allowed to borrow and the rate of interest on your debt. Here is a quick and simple guide to credit ratings, and how you can boost your score to gain access to better credit facilities at lower rates of interest.
Boosting Your Rating
Every consumer has a credit rating. These are used by lenders like banks and credit card companies to assess your ability to responsibly manage credit and pay it back over time. They are also used by mortgage lenders to assess risk and will contribute to the interest rates you will pay on your mortgage. People with higher credit scores often pay lower interest rates on debt as they are seen as a lower risk. Boosting your credit score and getting a higher rating can be incredibly beneficial if you want to buy a home, or get a loan to help finance a larger purchase, such as a car.
People with low credit scores often struggle to get approval for loans or other credit facilities. If you have a low score, you should visit sunny.co.uk and see if you can get a loan from them that will help you boost your credit score. Their bad credit loans are a great way to get some credit that you can manage responsibly by making regular payments. Each payment that you make on time will boost your score, giving you access to new credit facilities and better rates on credit cards, loans, and mortgages.
Ratings, Scores, And Reports
Credit rating agencies use financial information to produce credit reports on consumers and give them a score. This score will be used by lenders to decide which credit facilities you should have access to, how much credit you should be awarded, and what rate of interest you should pay on the debt. Many of your everyday financial transactions will contribute to this report and affect your score. If you consistently use an overdraft facility, for example, this will negatively affect your score as you are relying on casual debt facilities to pay for your cost of living.
To have a positive impact on your score, you need to make credit payments on time. This shows creditors that you can responsibly manage your debt without incurring any penalties. The more payments you make on time, the higher your credit rating will go. Even having credit facilities on cards or in stores and not using them can help you gain a higher credit score, and more access to preferential rates of interest. Even if you have had problems with credit in the past, you can turn around your score pretty quickly by making your payments on time or ahead of time, and reducing your overall level of debt.
The Details Matter
If you are having trouble getting credit, or you are preparing to get a mortgage, you should request your credit report. Small errors in your report may be preventing you from getting the credit you need. You have the ability to correct information and fix these errors to help you increase your credit score. This is an excellent step to take in the months before you apply for a mortgage. Your score will bounce back within a few months, and give you access to improved lending facilities with better rates of interest.
Your address history can be an important factor. The longer you live in a home, even if you are renting, the more stable you appear to lenders. Your employment history and salary are two crucial factors. Your annual salary may be out of date, and this has a huge impact on how much you can lend. By updating this information, you can gain access to more credit facilities, loans at better rates of interest, and larger mortgages. Whenever you are planning on taking out some credit to help finance a large purchase or applying for a mortgage, make requesting your credit report a part of your preparation.
Do not be intimidated by your credit rating and your credit score. You can take control of it and make positive changes to your credit rating that will help you lend more at lower rates of interest. Knowledge is power, and the more you know about your score and how it has been calculated, to more power you have to make a change.
Get your hands on your report and make sure the information is accurate. Ensure you make your payments on time to push your score up and get access to better credit facilities. It takes work, but in a short amount of time, you can make huge changes to your credit rating.