What is it?
- A three digit number that indicates how reliable you are at paying back money
- It is based on how you have previously handled money and debts.
- The higher your credit score, the more likely you are to be accepted for credit and at better rates
- Credit scores are important if you wish to take out any sort of loan or mortgage in the future.
How does it work?
- Your credit rating is calculated whenever you apply for credit, such as a loan, a credit card, or mortgage.
- Lenders have different ways of calculating your credit score, so your rating may vary between them.
- To calculate your score, they may look at your previous borrowing, your current borrowing, and your income.
- If you have a poor credit rating, you may find it difficult to get your credit accepted.
- Late or missed payments are likely to have a negative effect on your credit score.
- It isn’t set in stone – your credit score can change daily or go up and down over time.
How to improve your credit score:
- Register on the electoral roll at your address.
- Avoid moving home as much as possible – lenders like to see stability, and they may think you’re moving because you’re unable to pay rent.
- Build your credit history by taking out credit and paying it back on time.
- Making regular payments on time each month is a good way to show you are a reliable person to lend to.
- Keep your credit utilisation low. Your credit utilisation is the percentage of your credit limit you have used.
- Check your credit report for errors and report any mistakes you find.
- Be aware of any fraudulent activity on your account – if someone has your bank details, they may have taken out credit in your name.
