Credit Ratings – what are they?

Almost everyone has a mobile phone, or a credit card, or pays for electricity or gas. You may even have a mortgage, or a loan for your car, or a personal loan.

If you’ve got any type of service, where you are required to make payments to a company, you’ve got a credit rating.

A credit rating is a summary of your credit history for the past seven years. This is often referred to as your credit file. It outlines:

  • Your personal details;
  • The details of every type of credit you’ve applied for;
  • Any overdue accounts against your name;
  • If you’ve ever filed for bankruptcy;

Upon your permission, your credit file is accessed by any company that you are applying to offer you some form of credit, or some type of good or service that you are required to repay over the course of a contract.

In many cases, not allowing a credit provider to access your credit rating via your credit file, would mean the credit provider would have no indication as to whether you would make a good candidate for the product or service you’re after.

Keeping a good credit score is based on making your repayments when they’re due, or paying your bills on time. A good credit score means an easier time for you to apply for other goods, services or credit in the future.

Should you run into financial trouble, contact your credit providers immediately to see if they can help you reduce your repayments or cancel any non-crucial subscriptions you may have (like cable television). This will help you manage your repayments and ensure you keep your credit score in good condition.

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