Your Credit Rating Explained By Sheila Challiner At Isnare.com Ezine Articles

The majority of us now have a credit record but not many people know their rating or what they should if it causes problems. It is extremely important to make sure that your rating is correct, especially if you are thinking of applying for a loan. Whichever company you approach will not supply you with a quotation until your credit record has been checked; if they then refuse your request then you won’t be able to do anything about it even if you don’t see any reason for the rejection. The best idea is to examine your rating whilst you still have time to get any mistakes corrected, so that you can begin your loan search with the knowledge that the facts on which your rating is based are correct. Firstly, you need to contact a credit record agency to get a copy of your record. There are three companies- Equifax, Experian or Checkmyfile- which can supply this information either by post or on-line. A one-off check by post, which will provide the information you need, costs around £2 whilst a longer term check or one that is available quicker costs more and is available on-line.

The most important thing on your credit report is your score; this figure specifies your credit worthiness. Equifax have been very helpful in giving details of their credit record rundown which details their rating for you relative to your score –

0 to 49 is rated poor and shows potentially severe problems in getting credit.
50 to 69 is rated fair which shows that some difficulty can be expected.
70 to 89 is rated good, with a good opportunity of credit being granted.
90 to 100 is rated excellent. With this score you should not expect any problems.

If you find yourself in the poor sector, the reason for your rating should be obvious to you – perhaps you may have had a County Court Judgement against you or you may have taken an IVA (Individual Voluntary Arrangement) or you may have been declared bankrupt. If you are still in the same situation then it will be very difficult to improve your rating but if, on the other hand, you have been able to demonstrate that this was a temporary failing and that you can now manage your money sensibly, then you should attempt to get your rating updated. There are several actions which you should take and the increase in your score may not register for up to 12 months. One easy way to improve your rating is to ensure that you are on the electoral role. This probably confirms some stability. Check for straightforward mistakes and get them corrected. Tidy up the record by getting rid of previous accounts which are no longer needed. Make sure that any new enquiry you make is requested as a quotation search because it will not influence your rating, whereas a credit search will, especially if it is rejected.

Finally, to reconstruct your record, you need to demonstrate that you are a responsible borrower; one way to do this is by taking out a high interest rate credit card and using it every month to purchase just a few small items. Then make sure you pay off all of the debt within the interest free period. This will demonstrate that you are able to manage debt responsibly by clearing any outstanding balance on time. If you want to maintain your improved rating then you must keep this record as a reliable payer when you have secured the desired loan.

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