Wednesday, 8 February 2017
the Money Advice Service has all the information you need to be able to do this.
You need your credit rating to be in good shape in order to borrow money, whether via a credit card, loan or mortgage. You may not be in a situation where you need to borrow money right now, but when it comes to credit ratings it is important to always be thinking ahead.
If you have a poor credit rating there are things you can do to boost it (which is why it is good to be aware of it in advance), but it would also be helpful if you knew what could be affecting it – so you can avoid lowering it again.
While some of the things that affect it are obvious, such as having a high level of debt or missing repayments, others aren’t quite so straightforward. In fact, you may not even be aware that certain things could and do affect your credit rating.
1. Other people
Did you know that other people can affect your credit rating? Let's say, for example, that you and your partner have a joint form of credit – perhaps a bank account, loan or mortgage. You may have spent years borrowing and paying back money on time – resulting in a great credit rating. Your partner, however, hasn’t, giving them a poor score. Although it perhaps doesn’t seem fair, this will also affect your ability to gain credit, due to the ‘financial association’ you have with said person.
2. Moving house
You wouldn’t think moving house would affect it, would you? After all, you only make a move when it is financially necessary or you are in a position to do so. Although moving house won’t automatically affect it – moving a lot will. Lenders tend to feel more comfortable if they see evidence that you have lived at one address for some time.
3. Not being on the electoral register
Are you registered to vote? If not, you are not only missing out on the opportunity to have your say, but not being on the electoral register could be impacting your credit rating. This is because lenders use it to verify that you are who you say you are.
4. Unused credit cards
You have probably heard that having a credit card can help to boost your credit rating – provided you are paying back the money on time. However, did you know that those credit cards that sit unused at the bottom of your purse could be affecting it? This is because lenders will look at how much credit is available to you, not just how much you are actually using.
5. Mistakes on your credit report
There could be a mistake on your credit report – through no fault of your own – but if you don’t check it and challenge it, your score could be much lower than it should be.
Jessica Foreman is a Durham University graduate specialising in business and lifestyle based writing. She has developed her skills on projects surrounding The British Broadcasting Company, and running a print and online based magazine whilst at university. She is currently looking towards starting her Masters in Mobile and Personal Communications as well as broadening her horizons through travelling.