What does your credit score say about you? If you aren’t aware of how your credit rating can affect your life, this should become a priority. The thing is, money makes the world go round. And if you need funds for any reason, such as buying a house or car, then your relationship with money and, indeed, creditors can put a stop to your plans.
Deciphering your credit score can be tricky, especially if you don’t know what you are looking for or what each term means. These days there are several ways to check if you are a credit risk to lenders or not.
In a nutshell, what exactly affects your credit score and what it means to you.
If you’ve been having trouble paying your bills and have missed payments or been late in making repayments, the credit reporting agencies will note this on your credit report. Lenders will notice this and may conclude that you are likely to experience the same problem in the future. The best way to counteract this is to avoid late or missing payments and contacting your creditors to discuss repayment plans you can realistically stick to.
If you have ever been taken to court because you have failed to repay a debt, your credit score will be the same way that late payments are affected. A County Court Judgement (CCJ) can stay on your record for six years, even when fully paid and satisfied.
Too Many Applications
Multiple credit applications don’t look good on a credit report. Whenever you apply for credit, even if your application is rejected, your chances of being accepted for credit are reduced. Because you’re attempting to borrow more money, you’re viewed as a higher risk. A large number of applications, especially in a short time frame, indicates that other lenders are rejecting you or that you are attempting to borrow a potentially unaffordable amount.
Stick to credit checks that perform a soft search that isn’t recorded on your credit file and searches are only visible to you.
Too Many Homes
Changing residences too frequently can harm your credit score because it may indicate a lack of financial stability. It may also cause lenders concern that they will not locate you if you fail to pay your bills on time. The absence of documentation about your current residence can also have a negative impact. Loan companies check the Electoral Roll to verify addresses, so make sure you register to vote at your existing home.
If you have many accounts, lenders may be concerned that you are at risk of borrowing more money than you can afford to repay. Transferring balances to a credit card with a lower interest rate or an interest-free credit card, as well as cancelling unused credit cards, all contribute to improving your credit rating. You’ll give the impression that you are in total control of your finances, which lenders love to see.
If you are struggling to obtain the credit you need, it is worth thoroughly investigating everything on your credit file to ensure there are no errors and everything is correct.