Have you ever checked your credit rating? If you haven’t, you may have no idea whether your score is high or low. Everybody has a credit rating. If your score is bad, it isn’t the end of the world, but it is advantageous to try and do something about it. If you’re keen to revive your credit rating, this guide will hopefully help you to prevent financial emergencies.
About credit ratings
Your credit rating is a numerical figure, which represents the level of risk you pose to a financial lender. If a bank or a building society agrees to lend you money, your credit score should dictate the likelihood of you being able to pay that money back. If you’ve got a high score, a lender will feel more confident about your ability to stick to the repayment agreement. If you’ve got a low rating, you may find that lenders don’t want to take that risk as they feel that there’s a chance you won’t be able to repay your debt.

Credit Rating
If you don’t already know your credit score, there are agencies you can use to find out your rating online. You have to answer some questions about your finances, and a report will be compiled based on the information the agency gathers about your accounts and your financial record. At the end, you’ll be presented with a figure. Different companies use varied rating systems, and your report will include information about your individual rating. Some agencies operate a scale from 1-5 while others will give you a score of up to 999. 
Why is my credit score low?
There are various factors, which can lead to a low credit score. The most significant issue people encounter is problems paying money back in the past. If you’ve missed payments on your rent or mortgage, for example, or you’ve taken out a loan and failed to repay it on time, this will count against you. You may also have a poor rating if your financial history is limited. You may think that you’d have a good score if you don’t have any debt, but if you’ve never borrowed money before, a lender cannot see that you’ve been able to repay a debt. If you don’t use your account on a regular basis or you don’t have many direct debit payments set up, this can count against you, even if you’re in the black.
You may also find that your credit rating is lower than it could be if you’ve applied for loans or credit cards in the past and your applications have been declined. If your account is linked to a partner and they have bad credit, this can also affect your rating. 
It’s often a good thing to borrow money when it comes to your credit rating. However, it’s not wise to borrow large sums on a regular basis. This may have the opposite effect on your credit score.  
What are the effects of a low credit score?
Your credit score plays an important role in determining whether you can borrow money. If your credit rating is sound, lenders will be much more likely to offer you chance to take out a loan or a mortgage if you plan to try and buy a house. If you try and find a loan online, and your credit rating is poor, you may find that your application is rejected. Your credit score will also affect how much money you can borrow. If you wanted to borrow a substantial amount, a bank may not feel confident agreeing to this if you don’t have a good track record. This means that you may find it difficult to get a mortgage or to apply for a credit card with a high spending limit. 
In addition, your credit rating will have an impact on the interest rate you’ll pay if you do borrow money. People with high scores are likely to be offered preferential rates because they pose a lower risk. 
Your credit rating doesn’t just impact your ability to borrow money. It may also prevent you from doing things you want to do. If your score is low, for example, you may find that you can’t take out a mobile phone contract or have broadband installed at home.  
Reviving your credit score
If your credit score isn’t as high as you hoped, try not to panic. There are many ways you can improve your rating. Here are some examples.
Take out a loan: if you’ve never borrowed money before, you may think that this stands you in good stead when it comes to your credit rating, but it can actually go against you. This is because you have no credit record, and this means that lenders don’t have evidence of your ability to pay money back. If you want to improve your credit score, and you’ve never borrowed money before, it may be worth taking out a small loan. Provided that you make sure you can afford the repayments, this will increase your score and show banks and lending agencies that you can be trusted. 
Check your details: sometimes, you may find that your credit rating is low as a result of mistakes on your record or fraudulent activity. Make sure your report has all the right personal details, and if there are irregularities, for example, there’s an application, which wasn’t made by you, contact the credit reference company and get any abnormalities or errors sorted out. 
Close accounts and credit cards you don’t use: if you have accounts open or credit cards that you haven’t used for a long time, shut them down. This is particularly beneficial if you have credit cards open with high limits. It’s good for your credit rating to have a credit card, but if you have a lot, this may set alarm bells ringing for the lender. 
Pay on time: if you’ve taken out a loan, you rent a house, you have a mortgage, or you have a credit card, ensure you make repayments on time. Set up a direct debit, and make sure you include these payments in your monthly budget.
Seek advice if you’re struggling: missing payments can be incredibly damaging to your credit rating, so seek advice if you’re worried that you’re not going to be able to cover your outgoings. 
Deal with debt: if you have existing debts, try and pay these off before you apply for a new credit card or try and borrow any more money. If you already have a lot of money to pay back, a mortgage provider or bank may be hesitant about approving any further applications. 
Stay put: if you move home on a regular basis, this can put lenders off. Sometimes, you can’t help moving, and you may have a job that requires you to relocate. However, if you don’t need to move, staying put can help to improve your rating. 
If you are worried about your credit score, it’s a good idea to seek advice from people with expertise in this area. Arrange to see a financial adviser. You can go through your credit report, discuss ways you can improve your rating and identify problems, which could be holding you back. You can ask questions and set out plans that will help you going forward.  
The benefits of a good credit score
If you’re and carefree, you may not be worried about your credit score, but it’s a good idea to think about the future. You may not be thinking about buying a house now, but fast forward 5 or 10 years and the decisions you make now may have a significant influence. If you’ve got bad credit, this can affect you years down the line. You may not be able to buy that first home you’ve been dreaming of for years, and your credit score may even affect your chances of landing your ideal job. If you’ve got a credit card or you’re thinking about applying for a loan, make sure you live within your means. If you can’t keep up with repayments, you may end up regretting your decisions in the future.  
A low credit score can hamper your chances when it comes to taking out a loan to buy a new car, carry out home improvements or even buy your dream home. Your credit rating is a numerical score, which pertains to the level of risk you present to a lender. If you have a bad score, this may mean that lenders don’t want to offer you the chance to borrow money. This may be disappointing, especially if you have plans, but a low score isn’t the end of the world. It is possible to improve your rating by showing lenders that you can pay money back and you do have control of your finances. If you have a poor rating, it’s a good idea to see a financial adviser and go through some ways you can boost that score. Try and avoid borrowing more money if you have debts or your score is low. It’s likely that you’ll only be able to access high-interest loans, which could plunge you further into debt.

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