A credit report track all of you financial interactions, such as the amount of various loans you have out, payments made on those loans and other bills, and information about your credit cards. Lender typically obtain your credit report as a means of determining how likely you would be at being able to repay a loan, if they offered you one. These lenders look closely at your credit rating, which is a calculation used to score your credit worthiness.
This can all get very confusing, but the important thing is that the better your credit score the more likely you are to get the loan and at a good interest rate. However, if you credit rating is poor or even bad, if can affect your ability to even obtain a loan. If you credit score is not as good as you want it to be, there are several steps you can take to improve your rating and get the loan you need.
What Affects Your Credit Score
The first step is to realize what factors affect your credit score. There are many things that can lower your credit score, such as high levels are current debts owed, missing or late payments on various bills, maintaining numerous credit cards that you do not use, applying for a lot of loans or other credit that you do not qualify for, and not having an electoral registration. The exact calculation used to determine a credit score is complex, but all of the factors listed above work to bring your credit score down, some more significantly than others.
Before you can make any improvement to your credit report, you must first know what your current report looks like. You are entitled to one credit report from each of the three leading credit-reporting agencies, including Equifax, Experian, and Callcredit. You should contact each of these agencies to ask for your report to be send to you either through the mail or online. There may be a small fee of £2 for each report ordered.
As soon as you receive your credit report, the first step is to go through the entire report and make sure that all of the information is correct. If you spot any errors, contact the credit-reporting agency in writing asking them to make the necessary changes. The agencies has 28 days after receiving your complaint to either fix the error on the report or provide you with information about why the changes cannot be made. If you had a life circumstance, such as the death of a spouse or loss of a job, you can provide the credit reporting agencies with a brief note of 200 words or less explaining your situation. While this will not change your credit score, it will be kept permanently with your file and sent to all of your potential lenders, who may take the information into account when deciding on your loan.
Now, it is time to look for ways to improve you credit score. If you have any outstanding bills that have not been paid on your credit report, you need to contact those lenders or companies and make payment arrangements to start paying. You should also sign up on the electoral register to help improve you score. If you have any opened credit cards that you are not using, close them out by writing to each of the companies. Above all else, do your best to start paying every bill on time, so it is not reported on your credit score. You should also try to reduce your overall debt by paying off some bills, if possible, and do not sign up for any more credit until your credit score is improved.
Taking these steps will work to improve you overall credit rating. This, in turn, will improve your chances of obtaining a loan and getting a loan with lower interest rates. Once you are able to improve you credit rating, you may want to re-evaluate some of your current loans to see if you can get lower interest rates, now that you are credit sore is better. This will help you save more money in the long run.