A good credit rating
Those who approach the market for a mortgage, loan or credit card know the importance of a good credit score. Over the past 12 months, the approval of new mortgages has decreased by 40 percent. Trends show lenders are now choosing to minimise risk by taking in high-tier individuals with the best credit ratings.
For people looking to borrow, the first step is ordering a credit report from one of the credit reference agencies such as Experian or Equifax after spending £2.
The lenders make a score based on five factors which are: the payment history, the amount of outstanding debt, the total length of the credit history, type of credit that has been used previously; and the type of new credit requested.
Individuals not on the electoral roll face problems getting credit. Credit Reference agencies use the electoral information as one first port-of-call for information pertaining to applicants. Those who are ineligible to vote typically have to submit evidence of UK residency.
The faster the debtor pays off previous loans and other outstanding debts, the more readily they are likely to be accepted by future lenders. In relation to credit cards, the number of active cards should be decreased. Even if the person does not use the cards and does not owe any money on them, the access to available credit from such existing sources may be a limiting factor; particularly where a person has more than two cards.
If it comes to the notice of the bank that the debtor has a tendency to miss payments, then this is a very limiting issue. Even missing payments once or twice can cause the bank to count against the debtor for up to six years. As the credit history sums up to 35 percent of the credit score, this may be a crucial factor when making new applications.
However: the medical history, savings accounts, criminal record and fines do not affect the credit scoring process. If there are too many applications in a brief span of time, the rating would be adversely affected and this makes the applications less likely to succees. If the person is rejected more than once, it is necessary to check the credit report for any errors or problems.
Those who have a bad credit record or no credit record at all must note that there is no quick solution to boost the score.
Share this..
Related stories
Oil saga in the Falklands moves to UN
Despite the fact that the UK has held sovereignty over the Falkland Islands and its surrounding waters since the mid-1800s, Argentina is again attempting to stake a new claim for sovereignty of the islands and the surrounding waters. This comes at a time when a small band of UK oil explorers have moved into the region with experts predicting that billions of barrels of oil could be discovered unde...
Read MoreTravel insurance urged for skiers
People heading off on skiing holidays have been urged to take a moment to think about their travel insurance requirements.InsureandGo has warned travellers that they should ensure they have adequate travel insurance policies in place when heading to the slopes this winter.Spokesman Perry Wilson also warned skiers to make sure that they take proper precautions when on piste this winter and do not d...
Read MoreLiving costs drop - inflation falls
Inflation fell to its lowest level in over a year in August, and the cost of living is also coming down, according to official data from the Office for National Statistics (ONS).The consumer price index (CPI), which the government uses to measure inflation, dropped to 1.8 per cent from 1.9 per cent in July, causing some to speculate that UK interest rates may not have to be raised again.Inflation...
Read MoreBanking bailout cost £850 billion!
The National Audit Office has today revealed the full extent of the UK government's bailout operation with regards to the UK banking sector and money markets. A total of £850 billion has been used to bail out the sector and while the vast majority of this will be returned in due course there is a likelihood of a multibillion pound income shortfall when everything is tallied up at the end of the d...
Read MoreBank Overdraft Charges Rise Again
Even though we have seen UK base rates fall over the last few months there are signs that the retail banks are not following suit. A recent report by Money Facts claims that wide spreads increases in overdraft charges have been instigated and savings rates have been reduced by more than base rate cuts in many situations. This is sure to put the banks on a collision course with the authorities ye...
Read More