Applying for a mortgage, personal loan or even some credit cards can take a while. Searching for a lender that has the best value product in terms of payable interest is a potentially lengthy process, while completing an application often takes up even more time. However, the most time-consuming part of applying for credit is the wait to see if your credit rating is good enough.
Everyone over the age of 16 with at least minimal financial responsibilities has a credit rating to speak of, but what do they mean? In short, they’re the score given to individuals that determines whether or not they’re worthy to loan money to in the form of a cash loan, mortgage or any similar product. The higher a credit rating is, the more likely a credit application is to be accepted.
What makes a good credit rating?
Every credit rating is calculated by a number of factors. The most important are previous financial history, current levels of debt, previous instances of financial irresponsibility, previous failed applications for credit, missed or non-payment of bills and constant changes of address. Errors made in previous or your most recent application can also cost you, as can multiple open bank accounts.
Credit ratings are worked out by three main agencies: Experian, Equifax and Call Credit. All three work for the majority of major lenders in the UK, process key data and pass it onto lenders who then use it to decide whether or not to lend money to credit applicants. From the first two, you can find out what your current credit rating is and work out how to improve it.