Credit rating UK - improve a bad score

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UK credit companies calculate a person's credit rating, so they can assess any applications that they receive, whether for a credit card, a loan, a mortgage or any other product. If you currently have a bad score, you may want to improve it - as not only does it help lenders establish whether or not to approve your application, but it also gives them an idea of the credit limit that they need to set on your account. This is so particularly in the case of credit and store cards.

How is a credit rating calculated?

Each lender will have its own scoring system, and the rating is calculated based upon the details that you give in your application, as well as any information they receive in your credit report from the various reference agencies. Essentially the more of the boxes that your application ticks, the higher your credit rating will be. And the higher the rating you receive, the more likely you are to have your application approved by the creditor.

What happens if my score isn't high enough?

This is down to the discretion of the lender. Some companies will reject your application outright if your credit score is too low, while others may consider you for other products, perhaps a credit card with a lower credit limit, or a smaller loan. You may find that some companies will consider you for the product you applied for, but part of the agreement is that you pay a higher rate of interest than customers that have a faultless credit rating would receive.

What is credit scoring?

When you apply for a current account, credit card, personal loan, hire purchase (HP) agreement or mortgage, or any other form of credit, it is likely that the lender will 'credit score' your application. This will help it decide whether to accept your application and, where relevant, to help set your maximum credit limit.

How can I get a good credit rate?

Lenders do not like taking chances on people. They like to know that bills will be paid in full and on time, and also that applicants are who they say they are. It is incredible how many people have their applications rejected simply because they didn't get round to registering themselves on the electoral role.

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