HOW TO IMPROVE CREDIT RATING AND SCORE

By Mina

HOW I IMPROVED MY CREDIT RATING IN LESS THAN 6 MONTHS

Having a hard time getting that latest iPhone? Wondering how to improve your credit rating and score? how long it takes? Oh well as a Nigerian, improving credit rating and score is not a word or sentence we come across in our lives. I never had an opportunity to buy anything for credit, or get a loan. If you want a car and don’t have the money to pay in full, there’s no retailer that will sell you anything for credit. Its either you have or you don’t, you are either rich or poor, there’s no in-between.

Relocating to England, I came with same mentality. I just buy everything in cash or I don’t have it at all. I couldn’t afford to buy a lot of things as they were either too expensive or not my priority. One day, after saving enough to get a smart TV, I went to Argos. As usual I was browsing through the store when a staff came to ask if I needed help, of course I had newbie written boldly on my face. After I made my choice and went to the counter I was asked if I wanted to pay now or later. I didn’t understand what they meant.

Like I can go home with the TV and pay later? I didn’t believe what was happening until I finally got home, stayed for 3 hours and no police came knocking on my door. Like every typical newbie, I went haywire with myself. I sat down in front of my laptop, search for everything I ever wanted that I can get now and pay later, got a brand new iPhone, a corner sofa, and did some clothes. Also, all the promotional loans adverts that was coming through my post, I applied for all and got the cards. Life was good, though I was making my payments, they weren’t on time and I missed a lot of payments. I didn’t know it would affect me, I thought as long as I paid back then I’m fine. And moreover, I was a student, i was finally in ‘The Abroad’ , living my best life.Well,so i thought.

And then life took a different turn, I finished studying, and needed a new apartment. Nobody was ready to rent to me, talking about I had a bad credit rating. Credit rating? What does that even mean? The only option I had was to either get a guarantor or pay 6 months upfront. Both I couldn’t get  because I had no one that met the criteria to be a one, so it was really a struggle. I ended up getting a cheap flat that I didn’t like so I could afford a 6 months rent upfront. I decided to improve my credit score so I don’t get to experience what I just had.

 

When you tell someone you have a poor credit rating, there’s always like a stigma. Some people start seeing you as irresponsible. and this is as a result of misinformation. Life itself is hard for an average person like most of us, and sometimes its inevitable to run into some sort of financial difficulty. Good thing is that you can always improve your credit rating and score. Everyone has financial struggle, Even a country that has a money printing machine are still in debt, then who am I? Please! Knowledge is key. Before you try to improve you credit rating and score, you need to have an understanding of what both means and the difference between them.

DIFFERENCE BETWEEN CREDIT SCORE AND CREDIT RATING

Credit rating is a detailed financial report based on the attitude of an individual towards repayments and settling of financial commitments. Creditors check this rating and decide based on previous dealings to assess risk  and the ability to pay back. Credit score on the other hand, is a numerical measurement lender check when assessing  the risk of a borrower.

HOW TO IMPROVE CREDIT RATING

  1. VOTERS REGISTER:    Lenders use the voters register for address verification. If your name is in the voters register, it gives lenders some peace of mind on your address.
  2.  PAY YOUR OLD DEBT:  The best way to improve credit ratings is to settle old and defaulted debt. You do not necessarily need to pay in full. Even if you have the money in full, set up a direct debit and spread the cost over 6 months, and this time try not to miss any payment. By spreading the cost over 6 months, it gives an impression that your financial circumstances have changed and you are in a much better position to handle loans. On the other hand, a one time lump sum payment might indicate that you are desperate for credit, and therefore trying to immediately sort out all your credits. Its good to pay all in full, but at the same time the lenders may be skeptical about this sudden action, making you appear desperate.
  3. DO NOT APPLY FOR NEW CREDIT:  Since you know you already have a bad credit rating, and chances of getting any sort of loan is very slim and also a decline in credit application has an adverse effect on the credit report. Try as much as you can not to apply for credit for at least 6 months while settling your debts.

HOW TO IMPROVE CREDIT SCORE

An improved credit rating will automatically improve your credit score. It didn’t take one day to have a bad credit score, therefore it wouldn’t automatically repair in a day even if you pay all your debts in a day. When your attitude towards your finance changes, like gradually paying and not missing payments, the score will increase in that line.

GETTING LOANS WITH LOW CREDIT SCORE

Having a poor credit score does not necessarily mean you cannot get loan, forget about your past credit attitude and change the current one by the three simple steps. The score may take a little longer to improve, Truth is that most lenders ignore the score and focus on your current financial attitude. Simply because a county court judgement you got 4 years ago might be affecting your score, but if your report shows an improvement in the recent times, Lenders may be willing to take the risk not minding the score.

These are what i did to improve my credit ratings. In December, i tried getting a contract phone, every one declined me and then i did the 3 steps given above, the next June I applied and got a credit card, a car as well as the phone.

You might not necessarily get a mortgage right away but you can get credit cards, phones and store cards which will eventually help in improving your credit rating and score and thereby help in building an even better credit future, if payments are made on time and not defaulted.

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