Credit ratings explained

Learn why credit ratings are important and how to keep a high rating

What is a credit rating?

A credit rating is an assessment the lenders use in evaluating the risk of offering a borrower credit. As a quantified assessment, each credit rating is calculated according to a number factors such as payment history, outstanding credit cards and loan balances.

How to keep a high credit rating

Get on schedule

In evaluating whether you are suitable for obtaining a loan, the most important thing which lenders look at is your payment history. Making your loan and credit card payments in time is important to show your ability to manage your money as well as your trustworthiness in repaying a loan. Likewise, missing payments on credit cards or loans indicates you have hardships in repaying the amount you’ve borrowed. Make sure you are making your regular payments in full and on time.

Keep an eye on your credit report

Request a copy of your credit report by contacting a credit-reference agency and check it carefully and identify any mistakes. In case you find any inaccuracies, take an appealto correct or have a note added to your file to explain any special circumstances.
There’s a small charge and you’ll need to provide the agency with your full name and addresses for the past 6 years.

Don’t apply for too many products

Making multiple credit requests at once can imply you are struggling financially, especially in case you are refused for a credit. As every credit search will show up on your credit report, make sure you have improved your credit rating before making another application. Lenders tend to infer you are having financial distress in case you are applying in more than one product within a short period of time.

Keep your contact info up-to-date

To ease the borrowing process, make sure that your contact information submitted to any financial institution is correct and updated, and compatible with your address registered on the electoral roll. Yet, keep in mind that changing contact info frequently may indicate instability.

How to improve a bad credit score

Unpaid credit and county court judgements (CCJs) are to remain on your credit rating file for a certain number of years, any they will not be settled until you pay them off. Therefore, the first thing to do to improve your credit score is to pay off your outstanding debts.