How to get better credit rating?
Credit Rating: How it works and how to improve it?
In today’s world of financial crises, it is extremely important to have an exemplary credit rating if you are planning to borrow money. It is the key factor that determines whether you are worthy of credit and if you can be made loan offers. The interest rate to be charged on the amount of credit would also be determined on the basis of your credit rating.
It would not be wrong to state that credit rating of an individual plays a very important part in ascertaining his worth, but there are ways of improving your rating if it is not really perfect. Here are some tips for you to get a better credit rating / improve your credit score.
Keep a standard address (if possible)
Stating the same address in your financial papers affirms your steadiness in terms of employment, and therefore, financial stability. Lenders feel more comfortable if your papers show that you have been residing at the same address for a minimum of three years if not more and that impacts your credit rating. It makes lenders wary and more cautious if your papers show you have been moving house too many times within a short span of time.
Keep a steady job
One of the ways to get approval for a loan is by having and holding a steady employment because it indicates financial stability. The more years you have put in with one company the better are your chances of getting a loan offer. There is a probability that you have changed jobs for better prospects, but too many changes within a few years would indicate fluctuating income and this could hurt your credit rating.
Proof of identity
Lenders need to protect themselves as well as you from fraud. Having your name on the electoral roll would be the best way to show your proof of identity if you are planning to avail a loan. Contact the council in your locality in case you are unsure of being on the electoral roll.
Apply only if you must
Your credit history also consists of the number of times you have applied for credit, whatever type of credit it may be – an overdraft, a mortgage, a loan, etc. If your credit history shows too many applications made recently, lenders may not be as forthcoming in offering you a loan. If some loan applications have been declined, it is prudent to wait a while before reapplying. If possible it would be prudent to speak to a specialized lender to help you locate loans for people who don’t have the best credit ratings.
Use your overdraft facility or credit cards responsibly. Lenders will trust your reliability in debt handling. Your credit card purchases and timely payments are a good indicator of your credit rating. We hope you’d find these tips useful for improving your credit score.
