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Reap the benefits of an excellent credit score

Experian logoExperian 21/07/2015 Darren Beach, Experian Experts Blog

If you’ve worked hard to build up an excellent credit score and you do your utmost to keep your credit report in order, then it seems only fair that you reap the rewards.

With a high credit score and a great credit history you can generally gain access to a wider range of credit products and services at cheaper interest rates© Dan Dalton/Getty Images With a high credit score and a great credit history you can generally gain access to a wider range of credit products and services at cheaper interest rates

When you apply for credit, the lender will use the information on your credit report, along with other information such as your application details to calculate a credit score for you. Each lender has their own criteria and therefore may score you differently. Your Experian Credit Score is a guide to help you understand how a lender may view you, based on the information in your Experian Credit Report.

One of the most significant benefits of maintaining a high credit score and a great credit history is that you can generally gain access to a wider range of credit products and services at cheaper interest rates.

More simply, this means that you could save a substantial amount of money.

According to research by the Cranfield Business School, commissioned by credit card company Aqua, a family with a good credit rating could actually be paying £1,225 a year less than a family with a poor one.

This is because people with problems on their credit reports, such as missed repayments, defaults and County Court Judgments (CCJs), are unlikely to be given good credit scores, or ratings, by lenders – so are more likely only to be able to get credit cards and loans with higher interest rates, if they are accepted for credit at all. And higher interest rates mean higher payments over the long term.

It isn’t just on cards and loans that having an excellent credit report makes a difference© Eric Audras/Getty Images It isn’t just on cards and loans that having an excellent credit report makes a difference

But it isn’t just on cards and loans that having an excellent credit report makes a difference. The better your credit history, the better the chance you have of getting a great deal on a mortgage – lower interest rates on a mortgage can make a massive difference to your monthly outgoings.

With these incentives in mind, it makes perfect sense to keep up the good work with your credit management. This can be done in two ways:

• Improving your credit score if possible. Your Experian Credit Score is an indication of how a lender may view you. To improve it, perhaps you can pay down some debt on, say, a loan that you might have, or increase the amount of ‘available credit’ on your cards. For instance, if you have three credit cards with a total credit limit of £20,000 and have used £15,000 of what’s available, you have 25 per cent available credit. Your aim should be to have at least 25 per cent available credit, or preferably 50 per cent.

• Making sure you don’t damage your excellent Experian Credit Report and Score. For instance, you can have a negative effect on your credit score if you max out your credit cards, or make too many applications for credit, such as balance transfer credit cards.

Accessing your credit report and making credit management part of your ongoing financial planning makes perfect common sense, and is important to help ensure that you can continue to reap the rewards of an excellent Experian Credit Report and Score. After all, you’ve already done the hard work – why stop now?

Content / Article provided by Experian – links to Experian CreditExpert are placed for promotional purposes

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