Looking to apply for a personal loan, mortgage or credit card, but unsure if you’ll get accepted? Our helpful guide to what makes a good credit history can help you understand how to get your own credit rating on track.
Yes. Your credit rating is determined by your credit history, and will make a big difference if you want to take out a loan, credit card or mortgage in the future.
Your credit rating is a score worked out by a credit reference agency, based on your current financial situation and your credit history. This rating is used by banks and other lenders when they are deciding whether or not to lend you money or give you credit. It gives them an idea of how much of a risk you might be if they lend you money.
The better your credit rating, the lower risk they will think you are and the more likely you are to be approved.
Your credit history is a record of the way you’ve handled debt and credit in the past. It looks at things like:
Your credit history will include a few other important bits of information, including:
Not all good credit histories look exactly the same but they are likely to have a few key things in common.
Here are some things that are likely to have a positive impact on your credit rating:
There are a number of factors which could lead to a poor credit history, which could then give you a low credit score. Some examples are:
The good news is that even if you have a poor credit history or don’t have a credit history at all, there are ways to build or improve it so you might get a better credit rating.
Here are a few things that might help:
Another little help: There is help out there if your score is low or if you’re having trouble making loan, credit card or mortgage repayments. Our guide to dealing with financial difficulty could be a handy place to start.
We hope this quick fire guide has left you with a clear understanding of how your credit history and your credit rating are connected. By being responsible with your finances you can build a good credit rating, making you more likely to be accepted for things like credit cards and mortgages in the future.