If you have a bad credit score it can mean that you will be restricted in what you can do. It will mean that it will be very difficult for you to borrow money, so whether you want a car loan, mortgage or credit card, you may be refused. It may even affect the chances of you finding a house to rent, getting a good utility deal or finding a job. It is therefore really important to try to get a good credit score.
If you have never had the opportunity to pay bills, borrow money or things like this, then you will not have a good credit score. This is because you have not been able to show that you are capable of making payments on time. This is no reason to borrow money though, there are other things that you can do to build up your credit score. If you get your name put in utility bills, get a credit card and pay it off each month in full, organise an overdraft and do not use it or other similar things , you should find that these will enable you to get rated. Then, as long as you make repayments on time this will help. It will also help you if you stay at one address for a significant amount of time rather than moving home a lot and make sure that you are on the electoral role at your current address.
If you have debts then your credit score is based on this. It means that you may not be trusted financially because of this and therefore you could find that it has a detrimental effect on your options. In order to prove that you can be trusted you will need to start working at it. Make sure that you always make all of your payments on time. This is not just your loan repayments but also your bills and rent and anything else that needs to be paid.
Make sure that you pay everything on time so that you can prove you can make repayments.
It is worth checking your credit record every so often. You may find that it is not correct and that is why you are having trouble getting credit. Make sure that items on there are correct. If there are things listed that you do not recognise then query it and have them removed or make sure that you have paid them off. You can pay as little as a few pounds to see your credit report and then you will be able to contact a credit reference agency if the information is incorrect and add a notice of correction to show that your circumstances have now changed.
Any late payments on utility bills, mortgage, loans or credit cards will stay on your record for up to six years and so you need to be careful of this. A CCJ will also stay on for as long and so avoid this if you can. If you are jointly named on something where the other person has a poor credit record, this will also be reflected in their attitude towards you.
If you have credit available to you, perhaps in an overdraft or credit card, that you do not use, then this could count against you. Lenders may look at how much available credit you have when they are deciding whether to lend you money and they could decide that they will not lend to you as you could potentially accumulate lots of debt. So get rid of cards that you are not using.
Having a permanent job is obviously a really big plus as well. Something with a good contract, rather than zero hours and that is reasonably secure. Knowing that you have an income coming in and that it is from a source that is likely to continue, makes a great deal of difference.
If you keep applying for credit and being turned down it will look bad on your credit report. It is best to stop doing so until you can improve it. By applying for a lot, it looks like you are desperate to get into debt, which is obviously not a good thing.
There are some pre-paid cards which can help to improve your credit rating. You will be loaned a very small sum of money by the card company and be asked to pay it back on a monthly basis. This will prove that you are capable of making repayments and paying off debt. However, these can be expensive and there will be fees as well as interest on money borrowed. There are also credit cards which can do the same thing but the interest payments will be far higher than on a regular card. If you pay the balance back each month you can build up your credit rating, but it could be tempting to get into more debt instead and be liable for the really high interest rate.