How To Refresh Your Credit Report

Posted on: 29 November 2007 by Gareth Hargreaves

Now that we are in the midst of a credit crunch, getting credit can be harder and lenders are getting fussier about whom they lend to.

If you are looking to take out a loan or a credit card, before you start applying it's best check your credit record with the credit reference agencies to make certain that you get the deal you deserve.

When you apply for a credit with a provider, the lender will do a search on you via one or more of the major credit reference agencies.

These agencies hold information on you such as details of accounts in use, how frequently you apply for credit, your payments record, the amount you owe, credit searches and other details such as county court judgements (CCJ), bankruptcy orders and individual voluntary arrangements (IVAs). Details of all your credit agreements stay on your record for six years from when the account was settled, written off or defaulted.

Around a third of us get turned down for credit, according to Experian, and it can be hugely disappointing. APACS, the UK payments association, advises that everyone should check their credit report regularly to ensure they don't have trouble accessing credit and to make sure they haven't been a victim of identity fraud.

Your Big Score!

Lenders use the data from the credit reference agencies to give you a credit score according to the risk you represent to them. Each lender has it own individual scoring system and they all have different criteria for making their lending decisions.

Your scoring changes all the time as new information is added. The rule is the higher the score, the lower the risk. If you are new to this country or have just started work, there wont be much information on your credit record for lenders to use.

If your credit record is spotless, all's well and good and you know that the lender is unlikely to turn you down. On the other hand, if your record looks dodgy it gives you time to groom your credit record to make sure it looks as good as it can. And there are lots of things you can do. Sprucing up your record can save you money as well because you'll get the interest rate you deserve.

Repairing Your Credit Record

  • Electoral roll
    Make sure you are registered because lenders use the electoral roll to confirm your name and address.
  • Avoid late payments
    We all pay late through forgetfulness at some time in our lives but if your record has too many incidents of late payments, you can get a lower score. Don't get hit with late payments on your record because of postal strikes. Pay using your lender's branch, telephone or online service.  You can avoid this sort of disruption by setting up a direct debit to pay the minimum payment.
  • Explain defaults
    Defaults stay on your credit record for six years. Always make sure that that you have paid them. If you have a good reason for defaulting perhaps due to divorce or redundancy, you could write to all the credit reference agencies with an explanation. When lenders conduct a search they will see your note and will take this into consideration.  CCJs, IVAs and bankruptcies will prevent you from getting credit and they remain on your credit record for at least six years.
  • Limit loan applications
    Don't apply for too many personal loans or credit cards at once because each time a lender conducts a search, it's registered on your record. Too many searches might look like you have financial problems.
  • Keep debt down
    Having too many loans and cards and being up to your credit limit, can damage your credit score. Try not to go up to the credit limit and close any accounts you no longer use, especially if you play the rate cards game to get a better deal.
  • Close accounts with ex-partners
    Accounts such as mortgages, credit cards or loans that you hold with someone else are listed on your report. If you split up, make sure payments are up to date and accounts are closed. You also need to write to one of the credit reference agencies to say that the link with this person no longer exists and they will share it with the others.
  • Update incorrect information
    Check your credit report regularly to make sure it's up to date. If you find incorrect information on your credit report you are allowed to write a notice of correction up to 200 words, which will be incorporated into your record. Normally there isn't a charge for this. This stays on your report until you request its removal.  While the agencies share some information relating to court matters, you will have to write to each agency with the updated information.





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