Maintaining a Good Credit Rating

Written by Karen Bryan

good-credit-ratingIt sounds as though a couple of late payment slip ups can have a big effect on your credit rating. I read on the BBC news site that a woman in her mid 20s earning a good salary, had been turned down for a mortgage. This was because of a late payment of store card and a disputed late payment on a credit card a couple of years prior to the mortgage application.

With mortgage funds in short supply, lenders have become increasingly picky about who they’ll lend to. Nont only do you have to save up at least a 25% deposit to get a reasonable rate of interest on your mortgage, but you also need a very good credit rating to get one in the first place.

The best strategy to avoid being stuck with the higher interest rates charged on loans for people with a poor credit rating is to set up all your mortgage/loan/card repayments by direct debit and make sure that there’s always enough money in your current account to cover all your bills.

If there is ever a late or missed payment which you can prove isn’t your fault, e.g. if this happened during the recent RBS systems failure, you need to chase this up to get the black mark removed from your credit score. You can get a free credit report for life from Noddle, enabling you to regulary check up on your credit rating. Then if there is an issue, you’ll be able to deal with it quickly.

Although it seems like a hassle to chase these things up, especially if a late/missed payment isn’t your fault, it’s much better to try to sort it out before you try to apply for a loan.  However, the lower rate of interest that you’ll get on mortgages and loans by maintaining a good credit rating, will save you lots of money over the years.

 

 

One Response to “Maintaining a Good Credit Rating”

  1. It is scary to think that one mistake can follow you around for so long. I agree – Direct Debits are the way to go 🙂