Personal Finance Possible ways to improve your credit rating
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Your credit rating is a way for banks to evaluate the risk of lending you money
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It evaluates your creditworthiness
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It is based on your ability to manage your debts and finances
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Credit Rating: What does it mean?
Photo by 401K via Flickr
• If you are applying for a 0 balance transfer credit card, a mortgage or even just a loan to buy a new car or something as small as a laptop, your credit rating is consulted
• Your credit rating could be the difference between a yes and no to all the above things
Why should I care about my credit rating?
• People often steer away from credit cards, knowing that you have to pay interest on payments. However not having a credit card can negatively effect your credit rating
• Credit card companies and banks do check your credit rating when you apply for a credit card but it is a very basic evaluation • Using a credit card properly will show lenders that you are capable of borrowing and paying back a small amount of money and will kept to secure bigger loans
Possible ways to improve your credit rating #1 Get yourself a credit card
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Missing payments negatively effects your credit rating
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Watch out for gas and electricity & TV licence payments – these are more than often checked
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Try to pay as many bills as possible by direct debit, this ensures you don’t miss the payment Photo by 401K via Flickr
Possible ways to improve your credit rating #2 Pay your bills on time, every time
• We all know how tempting it can be to max out your credit card, those new pair of shoes are calling • This might show the lender that you are impulsive and that you are pushing your limit • It is suggested that you stay 30% below your limit unless there is an emergency, no matter if you pay it back in full every month or not • This shows that you are able to balance your credit, and paying it back in full every month again shows your ability to manage debt and thus improving your credit rating
Possible ways to improve your credit rating #3 Don’t max out your credit card
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Keeping tabs on your credit rating means you can iron out inaccuracies with your finance history
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You can get a credit report from credit reference agencies such as Experian. They also have a handy credit rating quiz to establish a quick credit rating prediction before you apply for a report.
Possible ways to improve your credit rating #4 Regular check ups
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It is recommended that if you have been turned down for a credit card or any kind of loan you should stop applying
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Continuously applying and being turned down can have a negative impact on your credit rating
Possible ways to improve your credit rating #5 No means no