Credit ratings

A Brief Introduction to Credit Ratings

Credit rating and scoring used to be an occult art practised by shady men in big offices, and you were unable to view your own but were constantly judged, declined and overcharged as a result of other companies’ access to it. However, in the new millennium things changed, and we are now fully aware of how we look as a potential investment – whether we’re looking for a new bit of plastic or a mortgage.

How It Affects You

Your credit rating will affect a number of things in terms of loans, mortgages and other financial services. However, in relation to credit cards, there are two major obstacles that having a bad credit rating may create when pursuing a new bit of plastic. The first is actually getting your application approved – if you’ve got a flawless credit rating, there’s no reason why sending off an application should ever be any more complicated than simply waiting for the stuff to come in the post. However, if your credit rating is low, or seen as “bad credit”, you may even have your card application rejected altogether. You may also be affected in terms of your base rate of interest – banks and card issuers will be reluctant to offer low interest rates to those who never seem to pay off their debts, and taking out another card with a large amount of debt already can sometimes be seen as putting oneself even more in debt. Credit ratings are sometimes difficult to track and manage, but the easiest solution is also the simplest. If you stay responsible and meet your payments, there’s no reason for you to gain a bad credit rating. Even if you do, there are ways to solve it before you start to think about bankruptcy declarations.

How To Solve Bad Credit

There are ways to come back from a bad credit rating. Even if it’ll never be that perfect, unblemished figure, you can still save thousands of pounds in additional interest and avoid rejected card applications by following a few tidbits of advice. Firstly, think about small, easily accomplishable ways to rebuild your credit rating. Think about paying off small debts, and do this often – it’ll accumulate into a lot of debt wiped out in the long-term and allow you to focus on the bigger, darker skeletons in your financial closet. Also consider that some debts you’ve cleared may still be listed as unpaid on your records, so make sure they stay updated. If a card issuer can see you’re attempting to vastly improve your credit rating, they may be more willing to deal with you in terms of approving applications and offering you a fairer rate of interest. That being said, any ex-spouses who were deeply in debt will have negatively affected your own rating, so look into filling out a Notice of Disassociation form to distance yourself from their bad financial reputation. Of course, after all of this the easiest way to maintain and even improve your credit rating further is simply to refrain from making the same mistakes. Meeting your monthly repayments on a regular basis will, over time, turn that horrible figure into one that will allow you access to better cards, and, of course, better rewards, interest rates, and more lenient creditors.