What Affects Your Credit Rating

A credit rating is one of those things that everyone will acquire whether they want one or not. Its almost impossible to go through life without any form of credit. In fact, I would go so far as to say it is impossible. Your credit rating first appears the first time you apply for credit. Of course its possible that youre one of the small minority that has never applied for a mortgage, or loan, or credit card but you would me amazed at who exactly will perform a credit check on you.

If youve ever set up a phone line with BT, applied for a mobile phone, even rented a property, then you will have a credit record. Of course, having a credit record is not a bad thing, however just as someone can have an excellent credit record, then they can have a poor one.

Having an excellent credit record is easy in theory. Firstly, you need to be paid regularly, and a decent amount too, but the main thing is that there are regular payments going into your bank account.

Secondly you need to have been living at your current address long enough to get onto the electoral roll. This can take anything up to a couple of years preferably as the owner of the property

Thirdly, you need to have been in your current well paying job for a long period. Lenders like to know that you have a steady stream of money coming in, and if youve chopped and changed your job, been unemployed for a while or are even self employed, it will affect your credit record.

Now, heres the most important thing and again its quite simple in theory. You must without fail pay all of your commitments on time and at the amount agreed. If you skip a payment, are late with a payment or cant afford to pay the whole amount agreed then quite simply, whether you like it or not, it will affect your credit history.

Manage all that and your credit history will be perfect. However, its unlikely that anybody unless they are very wealthy, never move with a perfect high paying job will be able to manage it. Life causes priorities and if it is a choice of feeding your children and skipping a credit card payment, or making the payment and seeing your children go hungry, then I do not think that there is a parent in the world that will make that payment.

So, your credit record is a little bit worn round the edges, all is not lost. There are a number of lenders who specialises in sorting out loans for people just like you. Unfortunately because of your credit record, the interest rate you pay may be higher than the most competitive on the market. However, if you service your loan correctly, this will be recorded with credit reference agencies such as Experian or Equifax and will go some way to repairing your credit record.

Jim Seward writes for Consolidate UK who offer debt consolidation loans to those struggling with their monthly payments. They also offer helpful tools

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