Managing your money- 5 ways your credit card can affect your credit rating

Here are five ways your credit report can show good use of your credit card. Following these simple tips could help improve your credit rating:

  1. Check out your credit report before you apply for new credit, as this can give you the best indication of whether or not you'd get accepted, and after that check your credit report on an on-going basis.

  2. Ensure that the information on your credit report is accurate, up-to-date, and reflects your present circumstances, as there may be some discrepancies. Should you find anything that isn't right, then contact the relevant lenders to get it altered.
  3. On your credit report you can spot if you'd missed some payments on cards or loa ns you have. Missed or late payments stay on your credit report for at least six years, though you can explain any missed payments by adding a "notice of correction", which is a statement of up to 200 words. Going forward, remember to stay within the agreed credit limits and always make your repayments on time.

  4. Each new application for credit will probably result in the lender checking your credit report and leaving a credit application search footprint. Too many of these can cause alarm, whether or not you were approved. So space out your credit applications and try to avoid making several applications close together, as lenders could believe that you're in financial difficulties, or even see it as a sign of fraud.

  5. Lenders can take into account the credit limits available to you, not just what you currently owe, so try to keep the balances on your card accounts to less than 25% of the credit limit. They're likely to view low 'utilisation' as an indication of low risk, so this can really help your credit rating, and longstanding accounts can be a good indicator of stability.