A credit rating is normally considered as an evaluation of the credit worthiness of an individual, organisation, corporation and provincial authority. Depending on the applicant’s past records, punctuality to pay debts, bank records and pending bills, the credit rating agencies decide whether to issue a credit card or not. Thus, your credit rating is very important and it should be a good credit rating.
Reasons for bad credit ratings:
Existing debts: If you are already under heavy debts and banks/credit card companies find you in a state where repayment of their money is a risk then this will create bad credit rating. In such cases, most companies will refuse to give you a credit card.
Late payments: If you are not punctual in returning money or make payments for mortgage, loan, energy bills and credit cards then again you will lose on credit ratings. These missing details will stay on the credit file for six long years.
No entry on the electoral register: The electoral register maintains a record of who you are and the voting details. The register is used by lenders to check your authenticity. If you are not on this register, then getting a good credit score becomes a tough task.
Mistakes on credit report: Any kind of mistakes on the credit report are scrutinised by lenders. Any fraudulent information which someone is giving on your behalf while misusing your card can leave a bad remark on the report. Such mistakes should be reported to credit reference agencies, so they can be investigated and removed at the earliest.
Gipsy life: If you keep shifting the home base time and again then your credit report gets affected. Any lender would consider someone more authentic if he has a permanent base and does not shop around for new homes.
Weak joint association: If you are tied to someone with a bad credit history then it automatically reflects on your credit report. Your joint account with someone whose banks show poor credit history for bank payments, loans and mortgages will certainly create a bad credit report.
How to improve your credit rating?
Find here, tried and tested tips to improve your credit card rating:
Check credit report: It is advisable that you check your credit report. If you can’t do it frequently then at least once in a year would do. Make sure the information it contains is correct. If there are any mistakes in it, then the lenders may not give you credit on purchases. So, get these mistakes corrected by credit reference agencies.
Register on an electoral roll: Chances of getting credit are sparse if you are not on the electoral roll. Contact your local authority on how to get yourself registered on the electoral roll or you can do it online.
Say no to new credits: If you apply for credit then it will leave a footprint on your credit file. Footprints are always visible to the lenders. If you have been denied credit by any company and that too recently then it is does not apply for credit card or loan immediately. Bombarding applications within no time gives an impression that you are in the financial crux so, they will not be willing to lend.
Close old credit accounts: It is good if you close old credit accounts as existing cards with high limits are one of the reasons lenders stop offering you any credits. Old credit cards are also susceptible to frauds and so, it is better to close them.
Disconnect joint credit associations: If your ex life partner or business associate has a bad credit rating and you have a joint account with him/her then it will be reflected in your credit report. Such financial associations should be disconnected and should be informed to the credit reference agencies so that notice of disassociation should become a part of your credit file. This will help in improving your credit score.
Create a good credit history: Start building a good credit history by making repayments on time and staying within the credit limits. Show that you are responsible in handling your credits and repayments. You can buy a credit card for bad credit which will charge you high interests, normally between 30% and 60%. They should be used just for correcting the credit report and not for borrowing. And you need to pay the full payments monthly to avoid accumulation of any debts.
All the above mentioned points will help in improving your credit rating. Practice them and make yourself worthy of new credits.