If you have never checked your credit score before, it can be safe to assume that this is because you have never needed to. This comes when you are applying for finance; so a loan, mortgage or money deal that you are getting to help pay for a product. It can also need to be done if you are looking at renting a property – an option that a lot of our generation are facing due to the ever-increasing value of the housing market rising. Although there are a few articles surfacing on how you can get a good credit rating, there isn’t much about the bad side of it all. What can make for a poor credit rating?
Late or Missed Payments
When a company lends you money, they are assuming that you are going to pay it back. That’s the deal. Late payments often come with a fee attached, a fine of sorts to encourage you not to do it again. Missed payments are another ball game completely. You can get into a lot of trouble from missing payments, although they are usually chased up quickly through various debt agencies to recover them. This can have the biggest effect on your credit rating, and not in a positive way.
No Borrowing History
If lenders don’t have anything to assess you on, they’re less likely to be able to make a judgement to give you a loan. A bad credit rating can often come as the result of you actually being good with your money and not needing to take out finance. The next time that you are offered finance, say for something like a sofa or a carpet that you can pay off with 0% interest over a year, accept it to build up your credit rating. Another good way to solve this is to get a credit card or small loan from a company such as New Horizons Loans and pay it off in a quick, regular succession so that there is proof that you have borrowed before. Remember that these companies are looking to see if you are a trustworthy borrower. Don’t be late with your payments back to them.
Too Many Accounts
It can go one of two ways when you are borrowing money. Open too few accounts, or have too little evidence that you have borrowed from a company before, and your credit rating will be poor. Open too many accounts to overcompensate for the fact that you need to build up your rating, and this will affect it negatively as well. You need to ensure that you are opening up enough credit cards to tide you over, and don’t go too extreme on the opening and closing of store card accounts. What you need is a consistent account that will be able to accurately reflect how much you have borrowed and you repayment plans to show future lenders just how reliable you are. This will see you well on your way to getting a good credit rating.