There is one thing, above all else, which can either negatively or positively effect your ability to borrow money. That same thing will determine the cost at which you can borrow money and the interest rate you will pay for the privilege. Sometimes that same thing even has the ability to keep you from getting the job you desire. That one thing is your credit rating.
Credit Bureaus
Every financial transaction you make, whether it is your monthly mortgage payment or your credit card balance, is potentially reported to the credit bureaus. The two major credit reporting bureaus here in the UK are Equifax and Experian. Both Equifax and Experian keep a file on every person living in the UK who has any form of income, a mortgage, or a credit card. Your credit report file details your financial history and determines your resulting credit rating score.
Your Credit Rating
Your credit rating scores are used to effect how you borrow money, the interest rates you pay for borrowed money, and potentially it is also used to judge your worthiness for a job. The higher your credit rating score, the less risk you are to loan money to and therefore the lower your interest rate you will have to pay. Additionally, if you have a higher credit score some employers view this as if you are a more stable person able to be a better employee than someone with a lower score. People with lower credit scores are seen as higher risks to loan money to and therefore pay a higher interest rate for money they borrow.
Improving Your Credit Rating
The good news, if you happen to have a lower credit rating score than you would like, is that you can do some very simple things to improve your scores. The first thing you should always do is to pay your bills on time, each and every month. By paying your bills each month on time you are showing that you are responsible with your money.
The second thing you should do to help improve your credit rating is to make sure that you are wisely using credit. A wise use of credit is to have one or two credit cards that you use on a regular basis and pay off each month when the billing statement comes. This shows that you understand how credit works and that you can afford to pay the bills as they come in.
Credit Reporting Agency Errors
It is said that one in four credit reports contains at least one error. Maybe you have a common name, or someone at the credit reporting agency simply typed in some data incorrectly, no matter what the reason is, it is very common to have errors on your credit report. You should order a copy of your credit report each year and if you find errors on it you should then follow the policies of the credit bureaus to get the errors corrected. Correcting errors on your credit report can be one of the best things you can do to boost your scores and allow you to borrow money at a lower cost.
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March 5th, 2008 at 5:26 pm
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