Millions of people in the UK are now getting loans to make ends meet. Because some of them do not have a credit history or a good credit rating, borrowing money can be a challenge. However, if you have no credit history or a bad credit record, do not panic because you can still find lenders that would help you. Here are some tips on how to achieve a fantastic credit rating and an excellent chance for loan approval.
Learn What Information Appears and Does Not Appear in Your Credit File
Your credit file shows your data, credit accounts, unpaid utility bills, repayment behaviours, properties, bankruptcies, and a lot more. All data would remain in your record for at least five years. However, companies could see every debt that you incurred within the last five years. Check for errors in history. Sometimes, loans that you have already paid would show up. You can call the agency and ask for the correction of the error.
Know What Types of Company Add Data to Your File
What companies can add data to your credit history? Banks, lending institutions, and credit card companies may input your transactions with them, as well as the utility companies. Credit card providers, car loan companies, and insurance companies also contribute to your credit record. Being an excellent payer to these companies can result in a higher credit record and better loan acceptance.
Be Aware of How Companies Use Data from Credit Reference Agencies
Credit Reference Agencies gather all the information about people’s credit behaviour. In the UK, the top three Credit Reference Agencies are the Experian, TransUnion, and Equifax. Although these firms do not dictate a lender to approve a loan application or not, they provide financing institutions with information that could influence their decision regarding a loan application. The data also helped other credit reference agencies to come up with a scoring system that could determine a borrower’s credit score.
Avoid Frequent Change of Address and Job
Lending to someone who does not have a permanent residence could be a big problem. If you keep on changing your job or address every month, lending companies would consider you a high-risk creditor. You can disappear anytime, and the creditors might not be able to find you to collect what you owed them. Providing proof of registration, permanent address, your contact number and that of your employer, and a bank account number could help ensure loan application approval.
Always Update Your Credit File
Lending institutions usually refer to only one credit bureau when you apply for a loan. Each reference agency keeps your credit record. You do not know which bureau the lender would use to see your credit history. To make sure that the creditors would see the same document, always check the information in your file and see to it that all records contain the same information.
Get a Copy of Your Statutory Credit Report
Anyone can request for a copy of his statutory credit report from Experia, TransUnion, and Equifax. You can request a copy from any of the major credit reference bureaus, or you can get it from the websites of these lending companies. Knowing the contents of your credit file would give you to improve your score.
Consider these tips when you are planning to apply for a loan. Remember that although some lenders are not strict with credit scores, they still take a look.