The very reason a credit rating is necessary is so lenders (mortgage, loans, credit cards, etc) can identify how good you are at giving back what you owe. Factors that influence your application include your age, a history of your credit accounts and any mobile phone contracts you may have had. Before you apply for credit, it’s vital you know what affects your credit and what doesn’t.
Here are 5 things that affect your credit.
- Being On The Electoral Register
While this doesn’t affect your credit score, it shows lenders proof of your address.
It can stay on your credit history for up to 3 years if you miss a payment or your payment is late to a lender. In the event that you can’t keep up with payments, talk to your lender to let them know you are having difficulties. From how you make the payment to how frequently you make payments, it all counts.
Making too many applications for credit doesn’t look appealing to future potential lenders. Applying for a lot of credit in a certain amount of time gives off the impression that you are in financial trouble. Lenders want their money back and if it seems as if you may not be able to repay them then they may decide not to lend you any money.
CCJ’s & Insolvency
A County Court Judgement (CCJ) occurs when you are instructed to pay back a debt by the County Court. A lender can take you to County Court in the event you don’t repay a debt.Bankruptcy and liquidation are alternative terminologies for insolvency. Insolvency is when a person does not have the cash to pay for their commitments. Both a CCJ and insolvency can affect your credit score in a negative way so avoid both cases at all costs.
Regular Income Helps
Regular income shows that you have the potential reliability to make regular payments to your lender. If someone is on a zero hour contract or they receive infrequent payments, it doesn’t look as attractive. When it comes to borrowing of any type, a permanent role is the most desirable to moneylenders.
Your salary, gas, electric and water bill payment do not affect your credit. On a normal basis, mobile phone bills do not affect your credit score either, however, if your account is passed on to a collection agency this will have an impact on your credit. Your spouse/partners credit also doesn’t affect yours, unless you have a joint account.
This post has been written by me from my personal finance website, Refined Currency.