Credit history, or a credit rating, is of no small importance, because it can be the reason for refusing you a loan. Here is what you need to do to achieve a good credit rating.
When you ask for a loan, be prepared for a check of your credit history. It can be a key factor in deciding whether to give you money. The worse the rating, the worse the loan conditions that you will be offered.
Credit-rating agencies Experian, Equifax and Callcredit told how they determine the credit rating.
Credit rating calculation
Interestingly, each credit rating agency has its own evaluation method: Experian estimates the British system of 999 points, Equifax 700 points, and Callcredit has 710 points.
Experian will give you 20 points if your credit limit is £5 thousand. And the net balance on the account will add 60 more points every month. Spending less than 30% of the credit limit will provide you with another 90 points.
If you missed a monthly loan repayment only once, 130 points will be deducted from you, and the total failure to fulfill your loan obligations will take as much as 350 points. A low credit limit of £250 or less will reduce the rating by 40 points. The same can be said about opening a new account within the last six months.
How to check your credit rating
Interestingly, two-thirds of Britons have no idea what their credit rating is. But to improve credit history, you need to know what it is at the moment.
All three credit rating agencies, Experian, Equifax and Callcredit, give the British the opportunity to review their ratings. And finding out about the rating is free, but you will have to pay for full and regular monthly information about your credit history.
Experian. Register on CreditMatcher, which not only gives you an idea of your credit history, but also helps you find loans and cards, which you will most likely not be refused. Those who want to have full information about their credit history will pay £14.99 a month after the 30-day trial period.
Equifax. To find out your rating, register on the Clearscore website. If you want to view more complete information after the expiration of the trial period of 30 days, you will pay £14.95 a month.
Callcredit. You can check the rating on the Noddle website, which will also offer you credits and cards, which you will most likely not be refused.