Is your credit rating cause for concern?
Your credit rating has the potential to affect your life on several different fronts. That means it’s worth taking the time to find out your credit score and take steps to fix it.
So just why does your credit score matter? And what can you do if your rating isn’t as good as you would like?
What is Your Credit Rating?
Put simply, your credit rating is an estimated indication of how likely you are to fulfill any financial commitments, based on your previous financial dealings.
Whenever you apply for any form of credit, the lender will look at your credit rating to help them determine how big a risk you are.
That includes whenever you apply for mortgages, loans, credit cards, and even new utility accounts or mobile phone contracts.
Why Does Your Credit Rating Matter?
At its worst, a bad credit score can prevent you from getting the credit you need.
Even if your credit score doesn’t prevent you from getting credit, it can have an impact on how much you’re approved for, and how much you’ll have to pay in the way of fees and interest.
As the article “Thought Leader Series: How Do Credit Ratings Affect Home Improvement Loan Rates?” says, the higher the risk you are, the higher the interest you’ll pay.
Your Credit Rating Affects Many Aspects of Your Life
Your credit rating matters in both your personal and business life. Any time you need credit, your credit score will come into play.
Your credit rating can also affect whether you’re approved for a lease, and if you are, what you’ll need to pay in fees. Insurance companies also check your credit rating before giving you a policy.
It’s clear that your credit rating can affect many aspects of your life.
Whether you are trying to lease a business premises or take out a loan, your credit rating matters.
What to Do About Your Credit Rating
The first step in cleaning up your credit rating is to find out what it is.
You’re entitled to one free credit report every 12 months from each of the three credit reporting agencies: Equifax, Experian and TransUnion.
Once you have your credit report in hand, it’s time to take steps to improve it.
Start by querying any items that you believe are in error.
Get in touch with the lenders involved and work towards getting any mistakes fixed or removed.
You can’t fix a bad credit rating overnight, but there are some steps you can take to improve your credit in the long term:
- Keep on top of payments;
- Seek help and advice immediately if you’re having trouble paying;
- Work on paying back debts as quickly as possible rather than just paying the minimum;
- Keep your credit card balances as low as you can;
- Only apply for credit when you’re confident of getting it, as each application shows on your file and repeated unsuccessful applications are a red flag for lenders;
- Don’t open too many new accounts at once, as length of account is part of what lenders will be looking.
Attaining and keeping a good credit score isn’t a one-time event but a series of sensible decisions and a commitment to only borrow what you can afford.
Start working on your credit score today so that by the time you need to borrow; lenders will see you’re reliable and capable of repayments.
About the Author: Tristan Anwyn writes on a variety of topics including social media, how to build customer relationships, content marketing and how to improve your credit score.
