Practical Tips to Improve Your Credit Rating

As the economy continues to be in doldrums, lenders are becoming very cautious to the people they give credit facilities. Some lenders charge high interest rates to individuals with poor credit rating as a way of mitigating the default risk involved. A good credit rating will definitely boost the chances of getting financial products such as mortgages, personal loans and credit cards from banks and other lending institutions. On the hindsight, a poor credit rating will limit your borrowing options. It is therefore very important to put strategies in place to improve your credit rating. Discussed below are ways you can improve your credit rating:

Always Pay Your Bills on Time

Never miss to make a loan or a mortgage repayment on time because it will affect your credit scores adversely. Paying your bills on time will avoid incurring penalties that could have reflected in your credit file. If you are in a fix and cannot make to pay your bills on time, talk to your lenders as early as possible.

Cancel All Expired Credit Cards

Most individuals switch cards often but fail to cancel old credit cards even if they no longer use them. When you do not cancel these cards, they still appear on your credit file. This will affect your credit rating negatively. It is therefore recommended that you cancel all the expired credit cards and have this information logged on in your credit file.

Check Your Credit Report Regularly

Ensure that you check your credit report on a regular basis semi-annually or annually from the main credit reference agencies which are Equifax and Experian. Checking your credit file will only cost you £2 but it is worth it because you will ascertain that the information on your credit report is accurate and up to date. Not all lenders that inform credit reference agencies of all changes that happen in your account right away and therefore you will have the opportunity to ensure that they have the updated details. It is also good to keep a close look for charges in your credit file which may be caused by identity theft or duplicate entries of unpaid balances. If you notice something amiss in your credit report, you should have it rectified immediately to ensure that you have the right rating.

Always Give Correct Information

Ensure that the information you supply on your loans, mortgages and credit cards applications are truthful and accurate. Inconsistencies of information provided will negatively affect your credit rating and may even be considered as a fraud.

Avoid Too Many Enquiries on Your Credit Report

When you are scouring for loans, ensure that lenders do not make equerries about your credit report without your knowledge. Lenders should only access your credit report when you have requested them to do so. Multiple credit checks within a short time spun can affect your credit score since it can imply that you are so desperate to get as much credit as possible even if you are not in a capacity to service all the credits.

Controlling your credit card expenses will also help to improve your credit rating. Aim to maintain your credit card balance at less than 25 % of your overall limit. Whatever the method of improving your credit score you employ, ensure that you are consistent.


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5 Ways to Avoid a Bad Credit Record

Having a bad credit record can severely impact on your life in a range of ways. You can experience difficulty finding a place to rent, as well as having applications for credit cards, loans and even phone contracts constantly knocked back. Preserving your credit record is particularly important if you are considering a home loan in the next few years. Here are 5 simple ways to avoid a bad credit record.

Create a Budget

Making sure that you have an accurate and detailed budget will help you to stay on track with all of your payments and expenses. You may need to spend several hours assessing your income and expenses in order to have a clear idea of what you have available for savings and bill payments. Try and allocate a saving account for emergency situations, and aim to have 3 months of your expenses saved at all times. This will cover you in case you temporarily aren’t able to earn your normal income.

Keep Your Details Up-to-Date

Ensuring that you stay up-to-date with any change of address and contact details will allow creditors to contact you directly. You can inadvertently damage your credit record by forgetting to update your change of address, and as a result miss any bills and outstanding payment notices that are being sent to your old residence. It also allows any creditors to contact you promptly in the event of a problem, which can save your credit record from receiving any unnecessarily damaging records.

Don’t Max out Your Cards

Try and stick to the minimum spending on your credit cards, and always pay it back as punctually as possible. Try not to max out your cards, as it increases the risk that you may not be able to make a repayment if your circumstances change.

Contact Your Creditors

If you’re experiencing issues making a payment, make sure you contact your creditors directly. You’d be surprised just how understanding they can be when given plenty of notice. Quite often they will make special allowances for cases of financial hardship, especially if you can present them with a structured plan of when you will be meeting your payment obligations.

Don’t Ignore the Problem

The worst thing you can possibly do is to ignore any credit issues. Being late on payment or worse, not paying at all, will do almost irreparable damage to your credit record. As soon as you are struggling to make your payments, you should contact your creditors to organise an alternative arrangement. If you aren’t comfortable doing this, an experienced debt solutions provider such as Fox Symes can negotiate with your creditors on your behalf. They will also assist in all kinds of debt help, from consolidation to personalised budgeting advice.

Preserving your good credit record should always be a financial priority. With the devastating impacts that a bad credit rating can have, your quality of life can be seriously reduced from even the smallest indiscretion. If you think you might have trouble meeting your repayment obligations, consider enlisting the help of professional debt solutions specialists.

How overspending can ruin your financial life?

With today’s expenses and their prices, it can be very hard not to overspend. Still, that isn’t an excuse to stray out of your budget. You know why? It is because overspending can only lead to more problems than you think. Overspending can affect your whole life. With all the possible consequences, it may jump to one problem to another.

Unpaid bills

All the excessive shopping with your credit card can cause steep bills at the end of the month. If you keep on using your credit but don’t have enough money to pay for it the end, then you’re surely in for a huge financial disaster. This will turn out to be missed payments, and missed payments will ruin your credit report. Missing out on payments will get your credit report marked for 7 years or more. And you can’t get rid of them by finishing them off.

Credit report

Overspending can cause a chain reaction of events. Once you get your bills due to overspending, it’s possible for you to miss out on payments. Those missed payments will be recorded in your credit report, and before you know it your credit score is going down with you too. As we all know, your credit score is your pass to banks and dealers. It can get you approved loans and cheaper deals out in the market. While a low sore will have you troubled in getting the creditors approval and trust.

More debts

Always remember that once you spend your money, it’s gone for good. Your money needs to be budgeted every week or month. If you spent your money for the whole month, there will be nothing left for you to pay for those bills. Most people result to borrowing more money just to get by, and borrowing money means that there is an interest and the longer you don’t pay, the bigger it gets; the more trouble you are in.

These are just a few of the problems that overspending can give you. Even if you have tons of money to spare, why not teach yourself a thing or two about financial responsibility. You can follow the following steps to avoid ruining your financial life:

Stay on a budget – Keep a check on your budget when you’re going out to shop. Make sure you have a plan and if possible, always list the necessary things that you need to buy and keep it that way only. Avoid buying stuff that is not on the list so that you won’t go out of your budget.

Monitor your credit report – Check your credit report at creditreport.com regularly. The credit reporting site will help you monitor your credit report along with your credit score. You can monitor your credit report for your pending bills, credit balances and your credit history. This will keep you in check on how much you should spend and how much to save.
Know your limits – When you are going to use your credit card for shopping, make sure you know your credit limit before spending. List down all the things you need to buy and compute the expenses ahead. This will help you in controlling overspending and managing your finances.

You can learn a lot from budgeting, keeping track of your expenses with your credit report and staying below your credit if you practice it. Save your money for the important things and spend it on your needs. Your wants are always there and it can wait.

Joy Mali is an active blogger and shares extremely interesting financial management tips over the web that encourages people to check credit score regularly & to build a working credit report for a happy financial life.