These days applying for credit can be like playing a lottery – you never know if you’re going to be accepted or not. However, there are some ways that you can ensure that your credit score is as perfect as it can be which will make you more attractive to lenders.
The first thing you need to do is check whether or not you are on the electoral roll. If you aren’t get on it as soon as possible. If you aren’t on the electoral roll then you are unlikely to be able to obtain any credit at all. You can register at any time during the year. If you own your own home, and are employed as opposed to working for yourself will boost your credit score and acceptance rates; having a fixed land line will also help. Longevity with your employer, bank and current home will show stability and also be beneficial to you.
Avoid making multiple applications for credit in a short space of time. This will damage your credit score. Leave several months before each application – and not just for big purchases either. Things like car insurance and mobile phones can leave a footprint on your credit file. Moving house will also impact on your credit rating so if you are thinking of making any big purchases on credit then it’s best to do this before you move. Likewise you will score higher on a search when you are in gainful employment so again, any big applications should be made before you go off on maternity leave or even if you suspect that there may be redundancies where you work.
You need to have a credit history to have a credit rating. When you make an application for credit you will be scored according to what’s on your credit file (credit scoring works by attempting to predict your behaviour); obviously if you have no previous credit then it’s impossible to do this making it more difficult for lenders to be able to offer you credit.
Always make your credit payments on time and make at least the minimum payments – more if you can afford to do so. Do not default or miss payments – this could hurt your credit score for several years. If you’ve had some financial problems in the past your credit score will also have taken a nosedive and you will not be an attractive lending prospect to the majority of institutions. You need to re-build your credit score. One way to do this is to get a credit card specifically designed for individuals with adverse credit, and use it correctly. Do not miss payments and do not exceed your credit limit.
Joint finances can have an impact on your credit score. So if your partner has a poor credit history then keep your finances separate if you don’t want their record to have an impact on yours; it’s usually mortgages and joint bank accounts that will financially link you to someone else.
Finally, it’s important to note that credit scoring is not an exact science and each lender will have their own criteria. So while you may be a perfectly acceptable risk to the majority of lenders there will always be the odd occasion when you get turned down.