What Can Affect Your Credit Rating?
If you are looking to apply for a loan, a mortgage or any number of other things your credit rating can be a factor in any decision. But while you may have seen adverts talking about finding out what your credit rating is how could it potentially affect those applications? In this article we are going to look at the factors behind your credit rating and what you can do to improve it.
It’s not just about what you earn
What may surprise you is that your credit rating isn’t solely about the amount you have in the bank or any borrowing you may have done in the past. Other factors can come into play – for example if you are registered to vote this can improve your rating.
That being said missing payments can have an impact- any time you miss card payments will stay on your record for at least three years (this also applies to any mobile phone contracts as well!)
Comparing is good but be careful
While shopping around for the best deal on a card is a good idea you should avoid applying for too many cards at once. The reason for this is that a lender may see this and think you are a potential risk so if you can space out any applications for at least a month.
When checking online for possible deals look before you contact any companies directly. Some will have so called “soft” checks that will allow you to see if you can apply without it having an impact on your rating.
In some respects, joint accounts can be beneficial to a credit rating but this is not always the case- if one partner has a poor rating then this can negatively impact both people in the partnership. Therefore, it is worth checking before agreeing to any joint accounts.
If you have to end a partnership make sure you contact any credit reference agencies so that you make it clear the link is broken and that your rating is updated.
If you can’t keep up repayments then you may have to agree to a County Court Judgement (CCJ) in order to repay your creditors. A CCJ or declared bankruptcy can stay on your record for as long as six years so it is important to see if there are any alternative agreements you can do with a creditor before resorting to this.
Check your rating
Ratings agencies are not perfect and there will be times when mistakes are made. For example, if it has been longer than six years a CCJ should no longer be applicable or if you no longer have a joint account then your partner’s rating shouldn’t affect your own. Getting a credit rating checked will ensure this stays updated.
If you are concerned about your credit rating or are looking for other financial advice and services please contact Larcomes Financial Services today and we will be happy to discuss your circumstances in more detail and find the best solution to suit your needs.