Turn Around Your Credit Rating By Mike Burridge At Isnare.com Ezine Articles

Your credit rating is a score that’s given to you based on your financial history. Your credit rating report is the document that all lenders check before they decide whether to lend money to you or not. If your credit rating is low, then you’re likely to get rejected when you want to borrow money, or apply for credit.

What affects my credit rating?

A credit report will show payment profiles of current commitments for the last twelve months, applications made in the last twelve months, County Court Judgements and defaults in the last six years and bankruptcy for the last ten years. It will not show any mortgages repaid more than 12 months ago or missed mortgage payments from more than 12 months ago.

All these factors go to make up your credit rating – and it is this report that lenders base their judgement on when they have been asked to lend money to you or give credit.

I didn’t realise my credit rating was bad

Most people don’t think about their credit rating until they are turned down for something. If this happens to you, then the first thing you should do is obtain a copy of your credit report. You can do this cheaply by applying to the UK’s two main credit rating companies, Equifax and Experian. There are other credit agencies, and each of them uses a slightly different method of calculating your credit rating, but these two are the ones to approach to start off with. Once you have your credit report, you can see exactly what the lenders see and then you can start to address the problems:

• Mistakes – there may be a mistake in your report. If you can show that there is a real error, you can add a note to the report to correct it.

• Missed payments – if you have missed payments on your mortgage, but have later caught up or made an arrangement with your lender, see if you can add a note to your report so that other lenders can see that you have taken responsibility for your finances.

• Credit and store cards – it’s easy to get out of your depth with credit and store cards. They are easily available and well-marketed. You can end up with debts on several cards and all that information is recorded. Try to cut down the number of cards you are using, or stop using them altogether, switching the debt to a single card that you can afford to pay. Always look to switch to a credit card that will give a low or 0% rate for balance transfers.

• Credit applications – every application you make for credit is noted. Every time you are rejected, a note is added to your file. The higher the number of applications and rejections, the more likely you are to be refused by the next lender. Stop applying for loans and credit cards immediately and look for a different solution.

There are companies who can help you to turn around your credit rating. Don’t expect overnight success, because it takes time for good payments to register on your records. For example, if you need to buy a home, choose a specialist adviser who can find a product to suit you, and who will help you to start managing your finances.

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