A credit rating is more than just the gatekeeper to your financing options - it's a digital representation of your spending (and saving) habits that you can use to improve your personal finances.
What is a credit rating?
A credit rating is a calculation designed to determine the level of risk involved in lending you money and, specifically, how suitable you are for the plans offered by that specific service provider. In general, a credit rating will consider:
Remember, lenders and financial service providers have different requirements and different thresholds for who they reject and approve.
What is a credit report?
A credit report is a detailed breakdown of your personal credit history, as researched by a number of independent companies. The main areas considered are:
Why was my credit application rejected?
Being rejected for credit, whether it's a mortgage, loan or credit card, does not necessarily mean you have a 'bad' credit rating. The 'blacklist' is a myth. Common reasons for being rejected are:
If you don't fit one company's plans, consider trying another. But choose carefully to avoid too many credit searches in a short spell.
How can I improve my credit rating?
A credit report changes over time, and developing or maintaining a 'good' one is perfectly possible. To get started:
The most crucial thing is to stay in control of your finances in the long term. Using tools like the free budgeting software from Money Dashboard helps you monitor your credit cards, current accounts and savings accounts, all in one place. You can also read our guide on building your credit rating without a credit card for some handy tips.