The credit rating is a cumulative score reflecting a person’s financial health and ability to repay debts. Applications for loans may be declined based on an individual’s credit rating, making it harder to meet home or business expenses.
The higher the individual’s credit score, the more likely lenders or creditors are to approve lending, such as for a short term loan. Each person’s credit score is different based on their financial commitments, such as to mortgages, credit cards, and bank loans.
A person’s loan repayment history for transactions such as short term loans is an indicator of how a person might manage future loan repayments. A credit report provided through a credit checking agency is a means of obtaining a personal credit score and understanding what constitutes the score amount.
By taking steps to increase their credit score, individuals can expand their borrowing options and are more likely to be approved for short term lending. The main ways to increase credit scores include:
- Registering your residential property for listing on the voting or electoral roll
- Protecting personal identity to avoid becoming a victim of credit fraud
- Repaying creditors on time and paying outstanding bills
- Keeping accounts in use and closing unnecessary accounts that are not used
- Having a credit history that shows an ability to repay money borrowed
Credit scores are low when the person has not registered to vote, defaulted on loans, gained county court judgments (CCJs), possesses numerous inactive accounts, and lacks credit history.