February 13, 2017
What is your credit rating? You might have heard this phrase being bandied about in adverts, and not thought a lot about it because you are semi-responsible with your money and don’t spend outside our means (too often). Realistically not a lot of people think about their credit rating until they are rejected for a loan.
Not to be over dramatic about how important it is, your credit rating impacts basically your entire financial life; opening a bank account, getting a loan or a credit card, getting a mobile phone contract, paying your electricity bill, buying a car, getting car insurance, renting or buying a home.
It’s defined by how much debt you have, whether you pay your bills on time, how many credit cards you have, any unpaid bills as well as your lack of previous debt. It can mean the difference between getting a good rate and a really bad rate when you take out a loan – that’s if you even get a loan!
Companies will look back on what you having been doing financially and use this information to predict how you will spend in the future. So even if you think you are a stand-up-financially-capable-human because you don’t have any debt, it can work against you. Your lack of debt, makes predications about future-you, less certain.
What’s my number?
The good news is there are only 3 agencies in the UK that keep financial information on you. This is where any of the banks/credit companies/car garages/phone companies etc will go to check up on you before they give you credit. But you too can see what information they have and make sure it’s (most importantly) correct.
Build a good history
Your ‘history’ is usually only kept for the last six years, so you can fix any bad debt you had when you went to uni and can build up a better history, so don’t panic.
One of the first things to do, if you haven't already, is register to vote. It’s a way to make sure you are who you say you are.
Secondly, stop spending your overdraft – it’s not your money, and it looks really bad if you are constantly dipping into your overdraft every month.
Don’t pay late or miss payments on your credit card – this is huge red flag. You’ll almost be guaranteed to be rejected if you do this regularly.
Another simple hack to building up a good history is to keep your billing address the same. It is hard because no one has a fixed address until they eventually buy somewhere, so use your parents address for your financial accounts and money matters.