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Getting Started: Managing A Credit Score

By: James Miller

Before we begin, here are some of the common terms you may come across regarding this topic. A credit record is, in essence an account of whatever credit that you have taken out for the last six years. It reveals the amounts you have accessed and if you have missed any monthly payments etc. A credit record permits possible lenders to search through your financial history so that they can make a determination as to whether to lend you money. The facts and figures on your record is put together by credit reference agencies for instance, Equifax and Experian. They utilise facts and figures from public documents (e.g. information from the electoral roll, court judgments etc) and from loan companies and also other financial institutions: e.g. credit accounts, credit applications.

A credit check is a form of research executed by a potential lender to gauge your eligibility for borrowing. Lenders will check out your credit file to see your present and earlier credit history. Lenders can then attach to you a a credit score to identify if the manner in which you control your finances fulfils their criteria for credit.

A credit score or credit rating is a means that possible loan companies use for evaluating the credit eligibility of an applicant. Lenders will examine the prospective client's credit report, the data on their application and the specific borrowing requested. Lenders will then utilise a mathematical scoring process to assess the degree of 'risk' associated with lending to the would-be borrower.

Even if your credit score is good, it is important that you keep it that way - or even improve it! The better your credit score, the more choice of credit options will be available to you - and normally with a better interest rate, too.

Building and maintaining a good credit rating doesn't happen overnight, so you cannot instantly repair or improve it. However, follow the tips below and over time you should see that your credit rating has improved:

1. First and foremost, make sure that all your payments are made on time. If for any reason you miss a payment, make sure that you pay it as soon as possible - definitely no later than a month overdue.
2. Keep the outstanding balance on your debts low. A high outstanding balance could negatively affect your credit rating, even if your record is otherwise 'clean'.
3. Check out your credit report regularly (the major credit reference agencies are Equifax, Experian and CallCredit plc). Make sure that all the information on it is up to date and contact the relevant company if you see any errors.
4. Check that you are on the Electoral Roll - this is proof of where you live to potential creditors and if you aren't on there, It will have a negative affect on your rating. Check with your local council.
5. If you are suddenly unable to meet the repayments on your debts due to unemployment, illness or family issues, then call your creditors straight away. They will be sympathetic and should be able to work a repayment schedule. Also try contacting one of the free advice centres available for people in financial trouble such as the Citizens Advice Bureau or the Consumer Credit Counselling Service (CCCS).

Article Source: http://www.article-exposure.com

James Miller is an active writer who took the time to produce very helpful and useful articles on plenty of topics for instance unsecured bad credit loans and other topics in some way about unsecured car loan and young driver car insurance.

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