When it comes to personal finance, it is common to read advice on improving your credit rating if you have a bad credit score. This can be excellent advice because good credit will enable you to borrow money and at reasonable rates, but what exactly is considered bad credit so that you know whether or not you need to make changes?
It can be difficult to know what a bad credit score is because there are three main credit referencing agencies and each score consumers differently. Experian state that a credit score is very poor between 0-560 and poor between 561 – 720 – anything above this is fair rising to excellent. The Equifax website lists scores as very poor between 0-279 and anything over 466 to be excellent. Noddles, meanwhile, uses a 1-5 rating with anything less than 3 considered to be poor. The scores may seem arbitrary, but your credit rating is affected by many different factors, including late or minimum payments, CCJs, little or no financial history and frequency of credit application.
How to Improve Your Score
If you have poor or bad credit rating, it can be difficult to know what to do because you will either fail to qualify for credit or be offered high-interest rates or worse deals as the lender will not see you as a responsible borrow. Fortunately, there are many different ways that you can improve your credit score to improve the chances of getting approved and get access to the better rates and deals. A few ways include getting on the electoral roll, closing down old accounts, cutting financial links with others and building credit by borrowing little and often.
Loans for Bad Credit
It is a smart move to build your credit rating and particularly if you need to borrow in the near future, but you will find that it can also take time to improve your score. An alternative is to find lenders that offer loans for those with bad credit – you can find out more here. This could help you to secure the funds that you need and they can even be a way for you to build your credit history. This is the best solution for those with very poor credit or those that have poor credit and do not have the time to improve their score.
It is important to check your credit rating and understand both what is a good score and what impacts your rating. You should not panic if you have a poor credit rating as there are always steps that you can take to improve your score over time, plus there are also alternatives in the form of loans for those with bad credit to help you secure the money that you need.