Your credit score and history are kind of a big deal and any financial move you try to make, such as getting a loan, buying a car, renting a house, or applying for revolving credit etc. Then the chances are that it will require a credit check of some sort in order to see if you are eligible. This can be extremely intimidating to a lot of people who may have a less than perfect credit report
What if your credit isn’t good enough? Is this something you can control? How closely will they look into my payment history? Can you improve your credit, or make sure that you successfully can successfully apply for a credit card? The good news is that, yes, there are things you can do, so here is your guide to passing a credit check and how to improve credit rating!
Be Aware of Your Eligibility
The very first step is to actually take the time to do some research and see whether or not you are actually likely to be eligible for your personal loan, mortgage, credit cards etc. You can monitor your credit at websites like Equifax in order to see where you stand and receive your free credit report. In order to understand exactly, whether you have good or bad credit, and what you can do about it. And it’s always a good idea to check your credit before you apply for any type of loan.
Sometimes, it will already be glaringly obvious to you that you’re not actually eligible for a lot of credit options, in which case credit applications are not only useless, but can actually be damaging to your credit. You see, every time there is a credit inquiry performed on you and every time you get rejected, your credit score will suffe a hit as it will be marked on your report the same way late repayments would be. But there are ways around that and the first pointer is to always ensure you check your credit before you go ahead and make any credit applications.
Perform Soft Searches
If the situation is not entirely crystal clear and you don’t know whether you would be likely to be accepted or not, a good trick to work around the system and not allow your credit to suffer is to perform a soft search. That enables you to do a mock-up with some of the information from your credit accounts to see if, in a hypothetical situation, you would be accepted or not. That can give you peace of mind and save your credit score from unnecessary hits. Remember: if you are not sure you will get accepted, applying for as many loans as possible is not the way to do it, as it will have the undesired affect!
How to Improve Credit Rating
Of course, if your score is not the best credit score it can be, you can also take active steps to help improve it and build credit. Here are just a few of the ways you can improve your credit score and boost your chances to gain eligibility for the loan you are seeking.
Don’t max out your credit limit
It may be tempting for you to max out your credit cards, even if you have the means to pay it back next month, it’s never a good idea to max out your credit limit. Instead, it’s better to only use 30% and keep it low, that way you show to lenders that you’re responsible with your credit and you’ll find that it won’t affect your credit.
Pay your bills on time
You wouldn’t believe the importance of something as simple as just paying your bills regularly. And if you’re looking into improving your credit, then paying your bills regularly is crucial. So, ensure that you pay your utility bills, mortgage and credit cards each and every month. You see, the later you are, the more that going to impact on your credit, especially if you do it repeatedly. Make a point out to always pay your bills on time, in order to keep that rating high and to ensure that you don’t get any late payment fees.
Repay previous debt
You’re not going to make much progress on that credit score if your old debt is still dragging you down, will you? Before taking other steps, make sure that you pay off your existing debts and your credit cards or at least set up a plan to allow you to start actively repaying your debts as soon as possible. If you are struggling with debt or having trouble repaying it, then Money Advice Service has excellent information on this subject.
Set up direct debits
Do you know how you can make sure that all of your payments make it there on time? By setting up a direct debit at the bank. That way, any recurring payments will be made automatically on the due date, and you never have to worry about forgetting or not being able to make the payment or any late payments. Just make sure you always have enough money in your bank account.
Did you know that an excellent tool to improve credit is to actually get a loan? It seems counterintuitive, because we just discussed how debt is damaging your credit, but this is different. You see, if you make regular, successful payments you demonstrate good character and financial responsibility and will have a positive impact on your credit and you will see your credit shoot up as a result. So getting a loan can be a very strategic and helpful move when you’re hoping to improve your credit score.
In conclusion, not only do you not have to fear anyone looking into your credit history, you can actually make sure that you can pass with flying colours! All you have to do is be aware of your situation and credit history and of the eligibility requirements and then start working to improve your credit score. It can be done if you exercise a little discipline and take some very important steps to “clean up” your credit, like getting rid of old debt and pledging to always pay make your repayments on time.