Are Too Many Credit Applications Bad For Your Credit Rating
As a general guideline, wait a few months between applying for alternative sources of credit. This also includes mortgages, loans, store cards as well as credit cards an even a mobile phone application.
Whenever you make an application for any kind of credit, a 'footprint' is added to your file. This notification is then visible to the next provider that comes to look at your file as a result of another application for credit. They can then also view your credit history, see what other credit cards and financial obligations you have, what the limit of the credit is on each and what the balances are. They are also able to check on whether or not you pay off your cards in full each month or if you are simply making the minimum repayments. Therefore, if you are making applications for credit in rapid succession, they may deem that you're becoming more of a higher risk and, therefore, you may not get offered the preferential rate you'd bargained for which they can offer to other customers who they deem pose less of a risk.
It is estimated that over 2 million people in the UK are at risk of damaging their credit rating by repeatedly making applications for a credit card after they've been turned down previously by the same lender. Having too much available credit indicates to lenders that you may be over-reaching your capacity to make the repayments on all your financial obligations.
So, there are a few golden rules to enable you to maintain a good credit rating in addition to avoiding making multiple applications for credit.
Firstly, try to pay off in full, or at least reduce, all of your outstanding balances each month if you can afford to. This is an indication to lenders that you are managing your money well and that you only borrow sums which you can afford to repay. This will have a positive impact upon your credit score.
Try to pay off in full any credit cards which have the highest rate of interest and then cut them up. Holding multiple credit cards with high balances on is an indication to lenders that you may be over-stretching yourself.
And, although this might seem painful, work out a budget and then stick to it!
Related Tags: bad credit, credit card, applications, credit rating, interest rate
There's no doubt that Alex Lowe has some great advice on managing a bad credit rating. You'll benefit by reading her bad credit guidance on the website http://www.completeconfidence.co.uk
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