Tag Archives: Contrary To Popular Belief

Steps to Improve Your Credit Rating (Part 2)

Liam Gerken asked:




Lenders like stability

This is shown in a number of ways, for example being with the same bank, employer and at the same address for a few years. Basically, the more stable your current situation is, the higher your credit score will be.

For instance, homeowners are more likely to score higher than those who rent. If your home has a landline it’s always best to put this down on applications over any mobile number, as this helps with security checks.

Also, the longer you have been with a particular employer the better, and those that are self-employed may find it harder to get approved, even with a large income.

Get closure

Contrary to popular belief, keeping multiple disused credit accounts open is not always a good move, especially if you’re trying to boost your credit score.

All this shows prospective lenders is that you could run up a lot of potential debt, which obviously might make them reluctant to open up further more lines of credit.

It is important to note too, that simply cutting up a card doesn’t close the account, it merely prevents you from using it. Also, even after a phone call to the lender, requesting closure of the account, it will usually be left open for a short while. It is a good idea to give them a call again in a few months time to confirm the account’s closure.

Building/rebuilding your history

First-time applicants are likely to find it quite difficult to get accepted for any lower-rate credit deals. This is because of their lack of credit history.

One of the things about credit scoring is that it aims to predict what you will do with any new credit, based on your past habits.

Therefore, if you are new to the world of credit, then there is no way of predicting how you will use it. For this reason, many first-time applicants will find themselves lumbered with higher interest rates.

It’s best to continue with any high-rate card or loan offered for up to a year, making sure you spend a little – and always make repayments in full, to avoid any ludicrous interest charges.

Once you have done this and have built some (hopefully positive) history you shouldn’t have any problem applying for lower-rate products.

This method can also be used to repair bad credit history.

Don’t miss any repayments

Although it’s always recommended to make more than just the minimum monthly repayment, if you are struggling to meet repayments, it’s always best to pay at least the minimum than to pay nothing.

Doing otherwise, even just the once, can seriously damage your credit rating.

If you are continually struggling to meet monthly repayments then it is usually a good idea to call the appropriate lenders. They may be able to arrange an alternative repayment schedule.

Brandon