Credit history: how to know your rating and what affects it

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.

What to do if you are refused a credit card

No matter how tempting this idea may seem, the worst thing you can do is immediately apply for a different card. The fact is that whenever you apply for a card, this is reflected in your rating. A large number of applications for a credit card for a short period of time can be perceived as evidence of financial problems.

At the same time, if you have never taken a loan and you do not have a credit history at all, you can still have problems obtaining a loan, because nothing is known about you.

How to improve the credit rating:

do not make too many applications for a loan in a short period of time. This will be seen as evidence of financial problems, and every subsequent request for a loan will affect credit history;

try always to pay bills on time, including debts on loans and utilities. Late payment will affect credit history;

try to reduce debt. Do this before applying for a new loan: if your debt is too large, the probability of failure is high;

use a special credit card to build a credit history. Such cards are characterized by a higher percentage compared to the usual ones, but if you are able to show by using them that you are spending money responsibly, your chances may increase.

Does the rent affect the credit rating?

No, regular payments for an apartment are not taken into account when calculating the credit rating. At least for now. But some deputies are in favor of taking into account rental payment.

Please note: Experian offers a service that informs tenants whether they pay on time, which ultimately helps improve the credit rating.

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