In this day and age it is most likely that you will need to borrow money at some point in your adult life, usually at least to buy a house, but more often than not to buy consumer goods.
Whenever, you apply for credit or finance, lenders check credit ratings to help them make a decision on whether you are a suitable person to lend to, using a process known as credit scoring.
There are a number of steps you can take to keep your credit rating up to date and help avoid the frustration and inconvenience of being turned down for credit.
Get to know your credit file
There are three credit reference agencies, Experian, Equifax and Call Credit, which hold information about every financially active adult in the UK.
These credit files combine three areas of information:
- The first is your personal information, such as your name, partner’s details and previous addresses.
- Then there is the publicly available information from the electoral roll, along with court judgments and details of bankruptcies.
- The file also contains your credit and financial history, including details of all your current and previous financial accounts, when you have applied for credit in the past, how much credit you have available to you (in the form of credit cards, for example) and your record of paying off debt.
Under the Consumer Credit Act 1974 you have the right to see a printout of your credit records, at a nominal cost of £2. To obtain a copy of your credit report, you could write to the credit reference agencies, or alternatively you can visit their websites.
If you are turned down for credit or finance, most industry codes actively encourage companies to disclose the reasons for their decisions. This information can help you to understand which part of your credit history is letting you down and how you can improve your credit score.
Here are some tips on how to manage your credit score:
- Keep your personal and credit information up-to-date
- Remember a mobile phone contract is credit and it could scupper your mortgage
- It is better to borrow than not at all – a small amount of manageable credit
- Watch out for footprints, marks left by credit searches
- Keep the agencies updated
These are links to articles related to credit.
Will missing credit card payments affect my credit rating?
What information do credit reference agencies hold about me?
