credit rating

[MrJuice]

I have some queries about one's personal credit rating.

Let's say you have a good credit rating. Beyond getting you a mortgage for 4-5x your income, what use is the credit rating? If you had an amazing credit rating (however one would get that and whatever that means), you would still only get 4-5x your income as a mortgage. Correct? So then what use is a good credit rating beyond getting mortgages?

Next question: I have a credit card in my name. I use it to pay for business purchases where I can and clear it through my business account. This amounts to well into six figures each year. Does this help my credit rating?

I can see how a bad credit rating would affect you but don't know whether there is any difference between having good and amazing credit rating

Thanks in advance

Edited by MrJuice on Thursday 28th January 22:45

[Quhet]

The better your credit rating, the cheaper your borrowing

[Gr44]

As I understand it:

Credit rating is a factor applied to you as an individually which takes into account any form of credit you have previously had, along with thing like CCJ's, bankruptcy etc.

Your credit rating will be higher if you have a history of using credit and being able to pay it off. If you have breached your contract with a credit lender at some point in the past, eg; missed a payment then it will come off your score.

So the fact you have a credit card (assuming it's in your name) should be beneficial to your credit rating as long as you've always paid off the minimum due (or more).

Those with good credit ratings are more likely to be offered more credit and at better rates, those with poor credit rating may not be given any credit at all, or small amounts of credit at higher rates.

Why do you think some people end up with payday loans? They don't pay 5000% interest because they wern't aware they could get a 0% credit card, they do it because no one will give them a 0% credit card.

Hope that helps, if you look on something like the Experion website it probably has more information

Rgds

Sean

EDIT:

Regardnig your query on mortgages, banks are not obligated to give you anything, they will only offer you a mortgage following a suitable credit score for the lender (some are more picky than others) and obviously affordability checks play a part in the total amount they will loan you.

Better deals (closer to 0%) mean less profit for the lender, so they need to be sure that you are a "safe" bet to pay back what you borrow, which is where the credit score comes in.

If you have poor credit history, a lender may still decide to lend you money but they cover the increased risk of you not being able to repay it by charging you a higher % on what you've borrowed. This applies to mortgages / credit cards / loans.

Edited by Gr44 on Friday 29th January 11:49