Enhancing your Credit Rating

Your credit score is usually a three digit number that indicates to lenders your ability to service a credit facility, based on your track record with your finances. If your credit rating is good then you will be offered the loan and at a favourable rate. If unfavourable you may be offered a higher rate of interest or refused the finance altogether.

A majority of the population have a good rating. Pay your credit card bills and other loans on time and your rating will be positively affected. Avoid incurring penalties for late payment or exceeding limits as these will have an adverse effect.

So what can cause an adverse rating? People can often not resist the urge to spend and their debts continue to grow. This is compounded by the increase in interest that is due.

Your credit report will be marked with any negative activity from your current borrowing. Being late with a payment or ignoring notifications from your bank will make other lenders wary of giving you credit facilities.

To maintain a good credit score, you have to pay your debts. Cutting down on your expenses, working overtime, getting a second job etc. can help but it is not enough. You are also encouraged to talk with your creditors if any problems arise. It is far better to agree a solution with them that may prevent adverse data being posted on your credit record.

Borrowing money from friends and relatives to reduce your debts may seem to be a way out of your problems. The only real benefit from this is that they are unlikely to charge you any interest. If you do take this option make sure you repay them otherwise you risk losing their trust.

You can also improve your credit score by monitoring your expenses. Some experts believe that, if you have a credit card, you should only use up around 25% of the limit; to avoid interest altogether make sure that you pay the whole balance and not just the minimum payment.

If your credit rating is good orimproving your bank may want to increase your credit limit. This is a good sign, just do not let it change your strategy of reduction. Just because they increase your facility does not mean that you have to use it.

Always check your credit rating once a year. It is not unknown for people to have incorrect data lodged in their report that adversely affects their rating. If you find anything wrong you have the right to report it immediately and have it removed. Your rating will improve following their removal.

Monitor your budget carefully to avoid overspending. Even if you have done well this year you need to keep up the good work and reduce those commitments. If you do not then you only have yourself to blame.

Learn more about credit. Stop by Phil Craven’s site where you can find out all about personal loan and what it can do for you.

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