Whether you’re planning on applying for credit in the very near future, or you just want to make sure that everything is as it should be, it pays to check your Credit Report. In many cases, there will even be easy steps you can take to improve your Credit Rating.
It’s important to bear in mind that every lender has its own criteria for assessing credit applications and there is no single rating that you should be aspiring to, other than looking to make it ‘as good as it can be’. But there are a number of simple principles that you can follow to ensure that your creditworthiness doesn’t suffer.
1. Pay your bills on-time
If it seems like a no-brainer, that’s probably because it is, and is one of the most important components in your overall Credit Rating. Demonstrating to prospective lenders that you can be trusted to repay any amount you’ve borrowed in the past is the most effective way to ensure you are likely to be taken on as a borrower again in the future.
Life is never predictable and seems to enjoy throwing curveballs that can get in the way of the best laid plans, but simple forgetfulness is a terrible reason for your Credit Rating to take a hit. Always set up Direct Debits to make sure payments go out on time every month - that way, provided the funds are in your account you’ll never miss a payment.
2. Stay credit active
Your Credit Report is a balancing act. You need to ensure that you consistently demonstrate your ability to manage credit and pay bills on time, but you don’t want too many accounts – or applications for new credit in a short space to time.
Lenders like to see active accounts, but don’t want you to have too much unused credit. It’s far too easy to forget about a dormant credit card that you no longer use, and so if you do have an account that falls into that category, it’s best to close it.
3. Get on the Electoral Register
The Electoral Roll is an integral part of your Credit Report. Lenders have been known to decline an application where they can’t verify someone at their current address – especially if there is a lack of payment history to assess. Much like being with the same employer for a long time, being present at your current address on the most recent version of the Electoral Roll is viewed as a sign of stability.
Even after registering, it can take up to 3 months for information to be updated with the UK’s three main Credit Reference Agencies, so if you want to give your report a strong foundation make sure you check your credit report to make sure you are registered.
4. Assess your financial associations
Anyone that you are deemed to be financially linked to – known as a financial association - will have an effect on your ability to get credit (and vice versa). A financial association is created when you enter a credit agreement with someone else – such as a joint mortgage or current account with an overdraft - and will remain there until you ask to have the association removed.
An association on your report allows potential lenders to search your associate’s file whenever you apply for credit. If they have a good credit history, this could work in your favour, but if they have a history of adverse credit, it could harm your application. This isn’t a problem for most people, but it’s important to remember that a financial association doesn’t end just because a relationship or financial agreement does – so it’s important to check that any link is still applicable.
5. Monitor your searches
Searches appear on your Credit Report under a few different categories. Some are there to show you – and anyone else checking it – any applications for credit that have been made (the outcome isn’t reported).
Audit footprints generally relate to you checking your own Credit Report and can’t be seen by lenders or other third parties.
Enquiry searches cover most other occasions that your Credit Report has been accessed and will include things like price comparison or ID verification checks.
In the vast majority of cases, credit searches don’t impact your Credit Rating, and will relate to you personally. On rare occasions though, credit applications that you don’t recognise could be the first warning sign of attempted identity theft or fraud – no laughing matter. It’s worth checking this section of your Credit Report regularly and carefully just to be on the safe side.
6. Keep your accounts updated with correct address
It’s no good keeping your account information in good nick if it doesn’t show up when a lender needs to check it. The best way to make sure everything appears is to keep it all under one address format. This must be your current address and should match the address you have on your Electoral Roll listing.
In the majority of cases, it shouldn’t be an issue, but certain formats – flats in Scotland for example – are notorious for appearing in different formats and causing problems for anyone attempting to locate a Credit Report.
Consistency in the way you give out your address is essential, is one of the most effective ways to make sure your Credit Report stays accurate.
7. Keep your accounts updated with the right name
Recently married? Divorced? Changed your name via deed-poll to Mitsubishi Von Hula-Hoop? As soon as you get a chance you’ll need to update your lenders with your new name. Driving license, passport and bank details are usually the first ones to get updated, but it’s essential to make sure your credit agreements are kept up-to-date as well to ensure the information is there the next time you go to apply for credit with your new name.
This is similar to your address and even needs to be consistent for the best chance of your report showing all of the information that lenders will need to see.
8. Check for any errors
Errors on your Credit Report are rare, but they can happen and on extremely rare occasions, they could just be severe enough to harm your ability to get credit. Fortunately, for the most part it should be easy to get your report updated to make sure it is an accurate representation of you; lenders and Credit Reference Agencies have a legal obligation to ensure that any information kept on you is accurate, so they should be able to change any errors once notified.
Should you find an error on your checkmyfile Credit Report and need to dispute it, we can do that on your behalf in most cases.
9. Monitor your credit report
Your Credit Report is your window into the world of what lenders are assessing you on when you apply for any kind of finance. It allows you to see what credit agreements are being reported and how you’ve maintained them, how much longer any specific entries will be reported for, Electoral Roll and Court information, any financial associations, aliases and so much more.
If you want to improve your chances of getting accepted for finance, or just make sure that your creditworthiness is in the best shape it can be, there really is no better place to look than your Credit Report.
checkmyfile has the UK’s most-detailed Credit Report, with data from 3 Credit Reference Agencies, not just 1 so you can see what lenders see when they assess you. If you haven’t already, you can try checkmyfile free for 30 days and then for just £14.99 a month afterwards, which you can cancel online at any time.