There are many times when people might need credit and often in key life moments whether you are in need of a loan for an emergency, buying a car or buying a home. In these situations, lenders will look to your credit score to determine whether or not you are a reliable borrower and this will determine whether or not you get approved along with the rate that you will pay.
What is a Good Score?
Many people understand why a good credit score is important but are not sure exactly what this looks like. Different lenders have their own rating system which can further complicate matters, so a good score with the main credit rating agencies are:
TransUnion – 781 out of 850
Equifax – 420 out of 700
Experian – 880 out of 999
How to Improve Your Score
If you have a score less than the above, you might want to take action to improve your rating before applying for any kind of credit. There are a handful of ways that you can do this, but some can take time so you should always check your score well in advance of making an application if possible. Here are a few of the best ways to improve your score:
- Register to vote
- Check your report for errors and fraud
- Pay your bills on time
- Use credit card often but for small amounts
- Close unused accounts
- Clear existing debt
Reasons for Bad Credit
It is also important to be aware of the main reasons why people have a bad credit score and in many cases it can be hard to improve. The main reasons for bad credit include:
- Low credit history
- Default on payments/debts
Advice For Those With Bad Credit Ratings
The above can make it very difficult to improve your credit score and get approved for credit, but you should not lose hope. Fortunately, there are solutions in the form of a bad credit loan from a specialist lender. Some lenders offer (secured) loans to those with a bad credit rating and will listen to their personal circumstances as opposed to numbers on a screen and this could even help you to rebuild your score as you will be able to prove that you are a reliable borrower.
Being able to access credit is hugely important in adult life and often in major life moments. Unfortunately, not everyone has what is deemed a good credit score which could be for any number of reasons, but there are things that you can do. You can take steps to improve your credit rating for approval and the best rates, but even if you cannot improve your score then you still have bad credit loans as a way to get approval for credit.