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
Bank cuts rates to 3%
Interest rates have been set to three per cent by the Bank of England, a cut of 1.5 per cent and the lowest base rate since 1955.The cut itself is also the biggest since a two per cent decrease in March 1981 and comes just after a 0.5 per cent cut in October took the rate to 4.5 per cent.A "significant reduction" in the rate was necessary to meet the two per cent target for CPI inflation, the Bank...
Read MorePay rise for apprentices planned
06/10/2014 Vince Cable will today announce plans to raise the apprentice minimum wage by £1.06. The Lib Dem Business Secretary is due to announce the rise at the Liberal Democrats annual conference in Glasgow later, and the move is known to be backed by the Conservatives. If cleared by regulators, it could come into effect by October this year. According to the government’s website, appren...
Read MoreYounger people urged to stay vigilant over credit card fraud
Those under the aged of 50, said to be the age group most at risk from credit card fraud, have been urged by one financial services provider to stay vigilant against the crime.According to research from Saga, 55 per cent of those quizzed admitted to carrying all their cards together, increasing the risk of card fraud in the case of losing their wallet.Also, it was found that 22 per cent of 18 to 3...
Read MoreUK government looking to create three new high street banks
The UK government is looking to create three new high street banks with the forced sell-off of bank branches by Lloyds bank Royal Bank of Scotland in the short to medium term. However, it is unclear exactly how these new banks will be created and what kind of strategy and service they will offer the UK population.
Ultimately the UK government would prefer to see a more local economy...
Problems In The Nigerian Oil Market Get Worse
At a time when the country should literally be rolling in income from the oil industry the signs are not good for short term oil production in Nigeria. While the major oil companies in the country, Shell and ExxonMobil, have enjoyed a comfortable relationship with the local government for some time it seems as though the relationship is becoming more strained. The government is demanding $2 bi...
Read More