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Credit cards, store cards and loans are a way of life for many of us. Particularly when it comes to major purchases like a new car or a holiday, we rely on credit rather than years of saving. With credit card companies making £6.6 billion in profit a year on our interest payments alone it’s useful to know how to get the best deals when applying for credit.

When it comes to applying for a credit card or loan there are a lot of different stories you’ll hear about what does and does not affect your chances of success. Even just applying can affect your score, but why? Here are some answers to common a credit question.

What Affects My Credit Score?

• Late Payments
If you’ve had trouble paying your bills and have missed payments, or been late in making repayments on past loans this will be recorded.

• Financial Judgments
if you have ever been taken to court because of missed payments this will affect your credit score.

• Over Applying
Every time you apply, successfully or not, your credit score is affected. You’re considered a risk because you’re trying to borrow more. Numerous applications show other lenders are turning you down or you are trying to borrow more than you can afford. Avoid applying for too many credit cards or loans, within a short time period.

• Too Many Open Accounts
Lots of accounts show lenders that you are at risk of over borrowing. Transferring balances to a lower interest or interest free credit card and cancelling unused cards. You’ll look like you’re in control of your money.

• Too Many Moves
Moving house too often can impact your credit report as it may worry lenders that they won’t know where to find you if you stop paying your bills. Lack of documentation about where you live can be bad for your score. Lenders use the Electoral Roll to verify addresses so register to vote at your current address.

• No Credit History
For those just starting out with financial responsibilities, or if you’re new to the UK, you’ll generally have a low credit score because you have little evidence that you can be a responsible borrower. Getting a credit card and using it responsibly can help you build a credit score and make you more attractive to lenders.

The better your credit score the lower rate of interest you can get from lenders so it’s always good to look as attractive a borrower as possible. A new and free tool from credit comparison experts totallymoney.com, has been designed to help you check your credit score. It is also very handy as it will offer tips based on your answers as to how you can improve your credit rating. It will also not be recorded that you checked, so it will have no negative effect on your borrowing profile. You can check your own credit rating here http://www.totallymoney.com/what-is-my-credit-score/.

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