Disclosure: This is a collaborative post about how to build up your credit rating
Having a credit card, loan, or in-store credit facility can be an incredibly useful tool. When used appropriately credit facilities can help you complete important purchases. This cost of purchases is spread over time, often paying very little interest. Every consumer in the UK has a credit score made by the three major credit rating agencies that determine your creditworthiness. Lenders use these to decide if you are safe to lend to or extend credit facilities to. Here are some simple ways that can help anyone to build up their score so they can get access to credit at preferential rates.
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Repaying A Loan
One of the best ways to build up your credit rating is to use credit facilities and pay them back. This pushes up your rating with every on-time or early payment you make. Throughout a loan, you will make many regular payments, and each one will help raise your credit rating. Eventually, this will give you access to even more loans, credit cards, and even mortgages with better rates of interest.
If you are struggling to get a loan or credit card you should look at ‘bad credit loans’. These can be issued to people with low credit scores. By taking out one of these loans you get access to cash and also get the opportunity to build up your credit rating. Look here to learn more about bad credit loans and how Sunny can help you turn a bad credit history into a high credit score future.
Update Your Details – Build up Your Credit Rating
When you apply for credit cards, your application details are checked carefully against existing records. Small differences in the data can prevent you from being approved for credit cards or loans. One of the most important steps you can take towards building up your credit rating is checking and updating your information that is held with rating agencies like Experian, Equifax, and TransUnion. Just a small mistake on your address or some outdated information could be preventing you from getting credit.
Each credit rating agency has to provide you with the information they have if your request it. This allows you to check it for accuracy and make any amendments needed. Taking a look at your own credit report also allows you to check for any other inaccuracies. It may contain outdated information on credit facilities you have previously had and paid off. Credit report agencies may think you have existing debt that has been settled.
Open Up Your Banking
Your current account contains a lot of valuable data that can help credit report agencies make more accurate decisions when assessing your credit rating. The nine biggest banks in the UK all offer open banking, but you have to agree to it. Open banking is fully secure and sends data from your bank account to credit rating agencies. It also send information to other financial institutions from your current account. This data can be used to help build a better picture of your income and your debt. Which in turn can help you to increase your credit rating.
Check with your bank to see if they can enable open banking and what you have to do to share this information securely with credit rating agencies. You may have to use online banking or your bank’s smartphone app to make the information available. Small changes to how you use your account when you enable open banking can help you raise your rating. Making a regular payments to bills on time every month will contribute to raising your rating with credit rating agencies.
Be Financially Disciplined
Being financially disciplined is the best way to improve your credit rating. Staying out of your overdraft, paying your bills on time, and money in a savings account can contribute to a higher credit rating. Paying regular bills on time without entering your overdraft proves to lenders that you can manage your finances responsibly. Pairing financial discipline with open banking can have a massive positive effect on your credit rating.
You should also be disciplined with your credit applications. Making multiple applications for credit facilities can negatively impact your credit rating. If you apply for a credit card, loan, or in-store credit and are unsuccessful do not try to get more credit from elsewhere. Repeated applications will push your score down, not up. Wait for a few months, make sure you pay any debt repayments and apply again in a few months. You are much more likely to be successful.
Having a credit card or loan can be a convenient way to pay for a holiday or finance a large purchase like a car. Follow some of these tips to help build up your credit score and get access to more credit at better rates. Make sure you always make your payments and manage your finances responsibly.