The beginner’s guide to credit reports and how to improve yours

June 3rd, 2014 - Posted by in Blog, Saving Money

credit scoreA credit report is what helps lenders to decide whether to lend money to you or not. Your credit report can even determine whether you are accepted for a mobile phone contract and other similar contracted products.

It’s so important to make sure your report is not only accurate and up to date, but to also ensure it is glowing with health and shows you to be a responsible and dependable borrower. With lenders tightening up their lending criteria and only offering competitive low rates to the best borrowers, maintaining a good credit report has never been more important.

It’s now easier than ever to check your credit report

There was a time when you would need to call credit reference agencies to obtain a copy of your credit report through the post, but now thanks to modern technology, you can get instant access to your credit score and other personal information.

The majority of lenders use one of two main credit reference agencies – Experian and Equifax. You can get your credit report here for free and check what data the agencies hold for you. It’s important to check over all data to ensure it is accurate as wrong or out of date information could count against you when you go to make a credit application.

Credit score less than perfect? Here are 5 ways you can improve it

Don’t worry if your credit score is not 100% perfect. There are many ways you can go about rectifying a credit score that is showing a few blemishes. Here are 5 that you can get started on right away:

1. Ensure all of the debts on your credit report are debts that you own and that are registered under the correct name and your current address. Challenge any debts that you do not recognise immediately by getting in touch with the credit reference agency or the lender directly. You could have been a victim of credit and identity fraud.

2. If you are not registered on the Electoral Roll at your existing address you could be refused credit immediately. Make sure you register with your local authority by calling your nearest Electoral offices.

3. Only apply for credit that is likely to be accepted. Ask lenders to run a quotation search rather than a full credit search when you are shopping for credit deals. Each credit search will show up on your file and could put lenders off if you make a lot of credit applications at once.

4. Go over all of your existing lending and ensure you are paying back all of your debts on time. Reduce any credit that you have on credit cards that you are not using. Even if you have a credit card with a limit of £3000 and you are only in debt for half of that amount, the full credit limit will be taken into account by other lenders.

5. Never taken out credit before? This can actually count against you as lenders won’t know you are a safe and reliable borrower. It might mean you need to opt for a credit card with a high interest rate in order to improve your credit rating, but if you keep ensuring you clear the balance each month you will not be charged any interest. After six months, your credit rating should have improved fairly dramatically and you can close the high interest card account and apply for a more competitive deal.

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