Fair credit

Definition

Fair credit is one of the five different types of credit rating a person can be given. It means your credit score is average, not good nor bad.

What does fair credit mean for me?

Fair credit means that you have not had any major issues on your credit file, but you may be missing some items that allow a credit check agencies to fully analyse your file. You may also be in the process of repairing your file, and have gone from poor to bad to fair credit rating.

If you have a fair credit rating, then you will find many finance options open to you, more so than if you had a bad or poor credit rating. However you may miss out on some of the most attractive products that are only available to excellent credit ratings, and your interest rate may be higher too.

What can I do to improve my credit rating? 

The credit rating is based on your financial circumstances and your traceability. If you have a lot of debt or outstanding financial payments, this can affect your credit rating, even if you are managing your payments well. You may want to consolidate your debts into a single repayment, allowing you to demonstrate you can pay it off and also get more control of your finances.

To improve your traceability, make sure you have your address and employment history over the last four to five years. A good way to prove your address history is to ensure you are on the electoral roll wherever you live. Having this up to date will make it easier for the credit check agencies. If they are unable to trace your history, then they may see that as a potential issue and that you are hiding some problems from them, even if that’s not the case.

Another way to build your credit rating is to take out a smaller finance package and pay it off. By proving you can borrow money and pay it off in a timely fashion, it reduces the amount of risk they associate with your application. If you have a lot of issues on your credit file, unlikely if you have a fair credit rating, it may be worth waiting until some of these are resolved.

What if I think my credit rating is inaccurate?

If you think your credit rating is wrong, you should have a look at your credit file and see what information is recorded there. That way you will be able to see what is negatively affecting your credit file and whether it’s accurate or not.

If there is an issue, you should write to the credit check agency and explain the problem, preferably with some evidence to back things up. Mistakes can be made, but you should also not be afraid to challenge anything on there, even if it means contacting a previous finance provider. If there is a major error, you may want to contact your local citizens advice bureau for help, or one of the debt management charities that can provide you with support.