Improve your credit score for a cheaper personal loan

If you are one of the many people who have had difficulty paying bills recently you may be wondering how you can improve the damage suffered to your credit rating. Money lenders look at your credit rating to see if you have defaulted on payments, how much debt you are in or if you have any County Court Judgements. If they see that you are behind with your repayments on your mortgage repayments, your credit rating will suffer and you will find it harder, and more expensive to get credit. If you considering personal loans then the better your credit history the cheaper your loan will be. This is because the better your credit history the less of a risk you pose to the money lenders.

If you are unfortunate enough to find yourself with a bad credit history do not despair as there are ways you can improve it.

First of all find out what your credit history is like. There are many services on line that offer this possibility, usually for free or for a small fee. Once you see where the problems lie and what your score is you can start to rebuild it. Credit history scores are in points, the more you have, the better your credit history.

Here are some steps that will help you repair your credit history and get a cheaper personal loan:

  • Firstly, having a credit card can help you build up your score. There are some credit cards out there specifically for people with bad debt. The interest is very high on these though so it is best to pay off any balance at the end of the statement period to avoid extortionate charges.
  • Secondly, show that you are responsible for your debts. If you have debts such as student loans, personal loans or a mortgage, make sure you make the payments regularly to build up your credit score. If you can show you are able to pay off the debt you have, you will have more of a chance of getting future credit.
  • Thirdly, if you do have a credit card, make sure that the credit you have on it is not the maximum available. So if your credit limit is £6000, try not to go anywhere near that amount, anything around £1000 will improve your credit score. This shows that you are in control of your debt and are not a reckless spender. Even if you pay your bills each month, try not to go up to the maximum limit. Most of all do not be late with a payment.

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