If you’re thinking about taking out a finance package, then there’s one thing that will affect everything from what products are available to you, to the amount of interest that you’ll be charged for the package.
If you’ve never applied for any sort of finance package before, then your credit rating can be a bit of a mystery to you. In a nutshell, your credit rating is a score that’s calculated based on your financial history. The more negative items on your credit score, such as missed payments or defaults, the lower it will be. This means the interest you will be charged is higher and there are less options to choose from.
The good news is that there are ways to improve your credit rating that you can take right now. Here are four quick things you can do to improve your credit rating.
The first step to improving your credit score is to know what it is. So you should use one of the free credit check websites to see what your rating is. You’ll also be able to see any marks on your credit score, i.e. what’s negatively affecting the rating. There can be occasions when what’s written on your credit score is incorrect, so you’ll want to report these and get them removed or fixed. Some credit check agencies will even boost your credit score just by checking it.
This might seem obvious, but you’ll be surprised at how many people who, when applying for a finance package, go in blindly.
A big part of how your credit rating is assessed is your traceability. Being able to show your address history is a good way to improve your credit rating. If one of the credit check agencies, those responsible for analysing people’s credit scores, can’t see your address history, then it could be seen as you’re hiding potential issues from them.
The electoral roll is a good way to prove your address history, and credit check agencies can view it and trace your history. If you haven’t yet registered or haven’t updated your details since a move, do so now.
Another way you can improve your credit rating is to show that you are less of a risk as a potential customer. To do this, you’ll need to be able to demonstrate that you can take out a finance package and pay it off without any problems.
One of the best ways to do this is to take out what’s known as a credit builder card. This is a credit card with a very low rate of interest, ideally 0%. You use this to pay for items and then pay off the outstanding balance immediately. You are then showing that you can take out credit and meet the repayments.
Another thing that can negatively affect your credit rating is by applying for lots of different packages. While you may want to shop around, the credit check agencies will look on this badly. It could be a sign that you are desperate for credit, which is a potential red flag. Remember, every time you apply for a finance package, whether you go through with it or not, it will be recorded on your credit file.
So, if you want to improve your credit rating, don’t keep applying with different finance providers. If you do want to get an idea of what’s available, you should use a finance provider, like Creditplus, who conduct what is known as a ‘soft credit search’. This is where a company looks at your credit score but this check isn’t recorded on your file, meaning the application doesn’t negatively affect your file.