Understanding credit and what affects your credit rating is an important aspect of money management. If you are mindful of your credit rating now you’ll be thankful for it later. Having a good credit history means that you will be considered financially sound by lenders and may be offered more attractive terms. If you have bad credit you may find it hard to qualify for a personal loan, mortgage or credit card, which can consequently impact on many facets of your life.
How does credit work?
So how does credit work? It essentially involves borrowing money by a prior agreement with a bank or financial organisation to pay it back at a later date. How much you can borrow, and the repayment conditions within which you must pay it back, may be determined by your credit history and your individual circumstances.
A credit history is accumulated from personal scores by lenders who assess whether you’re a reliable borrower as determined by your past performances. This credit reporting data is then kept on file by one of the UK’s three main credit reference agencies: Callcredit, Equifax or Experian. Everyone has the right to this data and can order a hard copy of their statutory credit report by post or online.
A credit report contains a range of personal details such as your name and your current and previous addresses. If you find that some of the information in your credit report isn’t accurate you can request in writing for it to be corrected.
Understanding credit is not just about avoiding bad credit. It’s about learning how to prevent credit card fraud and the actions you can take to restore a good credit rating if you have bad credit. So find out how to read your credit report and what affects your credit rating. By using an aqua card responsibly you can begin to rebuild a strong credit history. Managed well credit can be extremely beneficial and is a good fall-back if you need access to cash in an emergency.