Avoid nasty surprises and check your credit rating
If you enjoy the finer things in life, such as staying in luxury hotels, pampering sessions and sumptuous meals out, you may like to put the occasional purchase or trip on credit – but are you aware that you could be turned down for credit because of a bad credit rating? Read on to find out more.
Most of the time you may not give your credit rating a second thought, after all, it’s not something you’re normally reminded of. In fact, many people can go for years with a bad credit rating without knowing it, only to be turned down when they apply for credit – and it may not even be their fault.
What is a credit rating?
Your credit rating is based on your financial history and is scored anywhere from 0 – 999. Your credit score could be worked out differently depending on the lender, but is usually calculated from factors such as public records (electoral roll, county court judgements against your name, and data from financial institutions) as well as your previous credit history. Lenders can use your credit rating to determine whether they should grant you credit – this helps to protect their business and ensures responsible lending. After all, why you should you be given credit if it seems you are unlikely to be able to pay it back?
How it affects you
If you have a bad credit rating, you may be refused credit, as well as certain products and services; for example, you may be unable to open a bank account, take out loans or a mortgage, and in some cases your credit rating could even stop you from gaining employment. This Investopedia article explains how your credit rating works:
http://www.investopedia.com/terms/c/creditrating.asp
Reasons for a bad credit rating
There are many possible reasons why you might have a bad credit rating, such as multiple credit card and bank account applications, financial difficulties, over-extended borrowing, trouble repaying a loan or mortgage, or even circumstances out of your control such as fraud or a basic administrative error. All of these factors plus more could have a detrimental effect on your credit rating.
Check your credit rating
Experts recommend you check your credit report around once a year, in order to monitor any changes which could have a detrimental effect on your rating. Your credit report is updated regularly, so checking once a year should allow you to spot any inaccuracies and tackle them head on, instead of waiting for a time when they could become a hindrance. It is your right to dispute any errors against your name which you believe should not be part of your credit rating.
Another good reason to regularly check your credit report is fraud. Fraud and criminal activity can sometimes go unchecked and could damage your credit rating through no fault of your own.
How to check your credit report
Experian CreditExpert offer a 30 day trial giving you unlimited access to your credit report and credit rating. Its service can also send you notifications via email or SMS if there are any changes in your credit report – leaving you to relax and enjoy yourself!
