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Your credit record, also known as your credit score or rating, is a number that banks use to figure out if a potential borrower is reliable or not. It’s a record of your financial history, from borrowing to credit to bills and more.
In the UK, the credit rating is calculated by consumer credit reference agencies. Here are a few you may recognise:
When you want to borrow money, lenders look at your credit score to decide if they want to lend to you. When we say borrow, we’re referring to lending products such as credit cards, a mortgage, buying products on finance etc. They use the score to not only approve you (or not) for their loaned money but also to work out what interest to charge you, if you are approved.
The UK government can also access your credit score when they decide if you should receive benefits. They also use it to follow up on unpaid taxes.
Improving your credit record can take time, which is why it’s important to take it into account as early as possible. When you’re self-employed, it can be even more difficult to get approved for lending products – and this goes for products from mobile phone contracts to mortgages. Having a poor credit score can therefore restrict your chances even further.
Here are a few things you can do to improve your chances:
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