You can boost your chances of being accepted for a credit card or loan by finding out your credit score first. Knowledge is power, so being in the know by being party to the same information as the lender, will place you in a much stronger position.
Are you aware of what sort of information is held on your credit file? Unless you regularly check your file, the chances are you don’t know, but finding out can help you work out the best ways to improve your rating.
The information held on your credit file helps lenders to decide whether or not they will accept your credit card, mortgage, loan or even mobile phone contract application.
If you know you’ve made a few financial slip ups in the past and your credit score could be better, or you’ve never borrowed and so haven’t yet built up a credit history in the first place, there are steps you can take to improve your rating so you are more likely to be accepted if you want to take out a loan or apply for a credit card.
Are you on the electoral roll?
If you have registered to vote, then you should already be on the electoral roll at your current address. The electoral roll is used by many companies to check you are who you say you are, so they can ensure someone else isn’t using your identity fraudulently to make credit applications in your name. If you're not registered on the electoral roll, you’ll need to get in touch with your local council and request a registration form, or alternatively you can register online.
Are you already a borrower?
It might sound odd, but if you’ve never borrowed money before, lenders are likely to see this as a negative. They want to know that you can manage your money responsibly, and if you have never borrowed, this cannot be demonstrated. If you haven’t ever had a credit card or loan, it may therefore be worth opening an account in order to create a credit history – but make sure you repay what you owe and on time, otherwise you could end up with a black mark on your credit file.
Check your credit rating
Are you certain that the information held about you is absolutely right? It is worth checking your file to make sure that it does not contain details that are wrong and could restrict your chances of being accepted credit. You can get a copy of your credit report at our credit monitoring service. And if you find any inaccuracies you can apply to the relevant agency to get them changed.
County Court Judgments (CCJs)
If you've had a County Court Judgement against you which has now been settled, make sure this is recorded on your credit file, as having one which hasn’t yet been settled can have a very negative impact on your credit rating. If your CCJ isn’t showing up as being settled, ask the court to provide confirmation details and pass these on to the credit rating agencies.
Don’t make repeated applications
If you are turned down for credit, don’t be tempted to make lots of other applications elsewhere. These will leave a ‘footprint’ on your credit file which could work against you as lenders might think you are desperate to borrow money, or that you are victim of identity fraud. Before making any credit application, get hold of a copy of your report so you know how strong your credit rating is, and only make applications for deals you are confident you will be accepted for.
Change of circumstances
If your personal situation has changed, for example, you’ve got divorced or lost your job, and you are finding it difficult to make ends meet, you must let lenders know as soon as possible. You can put a ‘Notice of Correction’ on your credit file explaining why you might have missed any payments. Lenders should take this into consideration when you make a credit application, particularly if you are able to show you have subsequently got back on track financially.
Keep borrowing in check
Don’t max out your credit card. If you owe money on your card, you should try and ensure it isn’t more than a third of your overall credit limit. If you often own much more than this, then lenders might start to worry about lending you any more money as they will be concerned you might not be able to keep up with repayments.
Pay on time
Make sure payments go out on time by setting up direct debits and standing orders wherever possible. It's easy to forget a payment so setting up direct debits and standing orders with your bank will ensure payments go out on time. This will also ensure you won’t be stung by any penalty charges or fees for paying late, which could have a negative impact on your credit rating.
Shut down credit accounts you no longer use
If you’ve got credit cards or other credit accounts which you don’t need any more, shut them down as soon as possible. When lenders look at your credit file, they focus on the total amount of credit available to you, as opposed to the amount you actually owe, so having lots of open accounts could reduce your credit rating.
Pay on time
Missing or late loan or credit card repayments will work against you and leave a black mark on your credit file. Make sure you always pay on time as this will show lenders that you are good at managing your money.
Other factors which can have an impact
As well as looking carefully at your credit history, when you apply for credit lenders will also want to check how long you have been a UK resident. If you have only recently moved here, you may have to wait at least three months before you apply for a credit card. You may also have to show proof of your income and provide evidence of employment.
How our site works
We want to show you as many credit reporting companies as possible, so you can choose the one that suits you best. We can’t promise to show you every single company, because some don’t want to be included on comparison websites. We’ve ranked the companies according to the fee they pay us, from highest to lowest. This doesn’t necessarily mean that the company at the top of the list is the best one for you – make sure you compare them to find the one that suits you best. You can find out more about how we work here.