How To Improve Your Credit Rating?

Not to mention, a credit score is an intrinsic three-digit number that lenders scrutinise to determine your credibility. A high credit rating highlights good financial comportment. Lenders usually prefer their own methods to determine your affordability, and therefore, it is likely that the score could be lower than that you receive in your credit report, but when all aspects of your credit file are stellar, your score would hardly be within the range of a poor credit rating.

It is vital to have a good credit rating because it improves your chances of qualifying for a loan at affordable interest rates. Note that a thin credit rating is also problematic. Lenders will be loath to approbate your application as it does not give enough certainty about your repaying capacity. Lenders confidently sign off on when you have responsibly managed multiple types of debts.

If you have no credit history at all, you should take out credit builder loans. As they are paid down over a period of six months, your credit score will become better.

Ways to improve your credit score

Here is how you can improve your credit score:

1.  Have proof of your accommodation

First off, you should have a proof of your accommodation. Get yourself registered on an electoral roll. Even though you are living in a rented or shared accommodation, you should get registered on the electoral roll at the current address.

2.  Build your credit history

If you have no credit history or if your credit history is extremely thin, you will certainly have difficulty applying for a loan at affordable interest rates. In order to improve your credit history, you should take out a loan. Credit builder loans could help you build your credit rating. You do not have to rely on only one type of loan. You should rather have a credit mix. For instance, apply for a credit card. Use them to make small purchases and pay off the bill on time.

3.  Make payments on time

No matter what debt you have taken out, whether it is a credit builder loan or a credit card, you should always try to make payments on time. If you fail to clear the debt on time, you will end up ruining your credit score.

If you have multiple credit cards and you do not use all of them, be careful while closing unused cards. It is vital to understand their impact on your credit score. Your credit utilisation ratio will significantly increase if you close unused accounts, even if they charge you some fees. They are worth paying. You should aim for a low credit utilisation ratio. It must not be more than 30%.

4.  Check for errors and mistakes

Your credit report could have some unidentified accounts. This might be due to identity theft or erroneous recording of information by the Credit Irish Bureau. You can get a copy of your credit file at any time. Make sure that you periodically check that there are no unidentified accounts. Sometimes, your credit score is low because of the identity theft. If you find any errors in your credit file, you should immediately report them to the credit agency.

They will discuss those errors with your lenders before removing them. It may take at least a month to fix those mistakes. It is always suggested that you check your credit report in advance because if you find your credit score low because of this, you will struggle to borrow money during emergencies. If somehow you manage to get the nod for a loan, lenders will charge high interest rates due to a bad credit rating.

5.  Check if Experian Boost can help you

Experian Boost can also help improve your credit score. Experian Boost targets those actions that are not considered by credit agencies, such as paying your Netflix subscription, council tax, phone bills, and the like. With the help of these actions, you will be able to show financially responsible behaviour.

It is vital to note that Experian Ireland only records credit information such as credit agreements, rent agreements, etc. In order to know your credit score, you will have to rely on the Central Credit Register for your credit report. When the database records good information about your credit, you will certainly qualify for a loan with a good credit rating.

6.  Avoid moving home too frequently

You should avoid moving home too frequently. You must keep in mind that lenders are always concerned about stability in your circumstances. If you keep changing homes, lenders would likely believe that you have a problem with repaying rent. Make sure that you have been living in the same house for at least a year at the time of applying for urgent loans for bad credit in Ireland.

7.  Use credit builder cards

Credit builder cards are similar to credit builder loans. The purpose of these cards is to do up your credit score. The available spending limit would certainly be lower. However, high interest rates are charged. After applying for a credit card for the first time, you will see a drop in your credit rating, but as you start making payments, you will see a significant improvement in your credit score.

Make sure that you use these cards only for a small amount of money and pay it off in full. When you use the card every month and pay off in full, you will be able to see a dramatic improvement in your credit score. Do not use credit cards if you are unsure about your repaying capacity. Otherwise, interest will keep accruing, and your credit score will decline.

The bottom line

Credit score improvement could take a bit of a long time. You will have to be patient while recovering your credit score. If your credit score is too thin or you have no credit history at all, you should use a credit builder loan or card. Apart from that, focus on timely payments, check for errors, and avoid moving too frequently.