Summary
- Love your credit report
- Set the record straight
- Protect your identity
- Assert your independence
- Don't leave footprints
- Tell the truth
- Check your National Credit Score
- Don’t let debts pile up
If you’re looking to improve your credit rating, chances are you have reason to believe it’s not as rosy as you’d like
While you can’t undo the facts on your credit report, you can correct misinformation
Your credit report is the key to your credit rating, because lenders use it when they decide whether to make you an offer – so it’s crucial that it is up to date and accurately reflects your circumstances.
If you’re looking to improve your credit rating, chances are you have reason to believe it’s not as rosy as you’d like. Whether this means you’ve been turned down for credit or you’ve taken a look at your credit report and faced a few home truths, congratulations on taking the first step towards improving your credit rating.
While you can’t undo the facts on your credit report, you can correct misinformation and take steps to clarify and add to the information that’s already there. You can also cultivate some simple habits that can help you keep on top of your credit report and improve your credit score over the longer term. The stronger your credit report and the higher your credit score, the more likely it is you will be able to get affordable credit when you need it.
Your credit report changes, so check it regularly
1. Love your credit report
This one’s easy. In order to improve your credit rating, you need to know what you’re dealing with, which means you need to see your credit report. The easiest way to do this is to sign up for a free, 30-day trial of www.CreditExpert.co.uk, the online credit monitoring and identity protection service from Experian, the UK’s largest credit reference agency.
Remember, your credit report is not frozen in time. Check your report regularly to ensure it’s accurate and up to date. That way you can ensure there are no nasty surprises the next time you approach a lender.
If you wish to clarify something that is already listed on your credit report, you can add an explanation
2. Set the record straight
Take a good look at your credit report. Is it current? Is all of the information correct? If anything on your credit report needs updating, you need to set the record straight. Here’s how:
- If a credit account has been paid but this is not shown on your credit report, contact the company concerned and ask them to make the necessary changes.
- If companies have searched your credit report more than once in response to one application, ask them to make the necessary amendments.
- If your name is not registered on the Electoral Roll, contact your Local Authority and request that they add it.
- If you have been linked to addresses with which you have no connection, contact the companies who created the links and ask for the links to be deleted.
- If you have separated from a spouse or partner, make sure he or she is no longer listed as a financial associate as soon as your affairs have been disentangled.
- If your credit report shows names you have never used, contact the company listed as providing the other name and they will investigate the matter and make any necessary changes to your report.
- If your credit report lists any applications or loans you do not recognise, contact Experian immediately, as this could mean you have been the victim of identity fraud.
- If a Bankruptcy Order has been discharged or annulled and this fact is not shown on your credit report, send a copy of the Order of Discharge or Annulment to all Credit Reference Agencies and ask for your report to be updated.
- If any information relating to an Individual Voluntary Agreement (IVA) appears incorrectly, contact the supervisor who dealt with your case.
If you wish to clarify something that is already listed on your credit report, you can add an explanation or Notice of Correction, explaining, for example, the reasons why an account fell into arrears at a particular time. The Notice will be shown to any future lender who sees the entry to which it relates.
In the event that you have any trouble correcting the information on your credit record or adding an explanation or Notice, contact Experian for help.
Most people realise they have been victims of identity fraud well over a year after fraudulent activity commences
3. Protect your identity
Identity fraud is the fastest-growing crime in Britain, costing the economy around £1.7 billion each year. In addition to being expensive, it’s also difficult to detect: most people realise they have been victims of identity fraud well over a year after fraudulent activity commences.
Keeping a close eye on your credit report can help you protect yourself against identity fraud. If your credit report lists anything unusual, such as credit applications you did not make or entries relating to organisations you do not normally deal with, contact the companies or organisations mentioned immediately. They will help you establish the facts and, if necessary, initiate a police investigation.
Lenders may take a look at the financial histories of the people you are linked with when you apply for a new loan
4. Assert your independence
Your credit report lists your financial associates - anybody with whom you have a joint account. Lenders may take a look at the financial histories of the people you are linked with when you apply for a new loan. If they have a poor credit record, your application could be refused.
Improve your credit score by asserting your independence. If you are now financially independent, are no longer part of a previous financial unit or no longer share a joint financial agreement, contact the companies who created the links you wish to amend and ask them to make the relevant changes.
Lenders may think an abnormal number of credit application searches indicates that you are desperate for money or over-extended
5. Don't leave footprints
If you’re shopping around for credit, ask companies for a quotation before making a formal application and searching your credit record. Lenders may think an abnormal number of credit application searches indicates that you are desperate for money, over-extended or even that identity fraud is taking place.
If companies have registered credit application searches when you only wanted information, or have searched your report more than once in response to a single application, ask them to remove the incorrect or extra searches.
Any inaccuracies on your application will be flagged up
6. Tell the truth
We probably don’t need to remind you, but please… don’t lie on an application form. Lenders usually find out and any inaccuracies on your application will be flagged up and cause all sorts of difficulties in future applications for credit.
Target your credit applications to products you are more likely to be approved for
7. Know what to expect: check your National Credit Score
Before deciding whether to offer you credit, lenders take the information in your credit report and on your application form and use their own unique formula to calculate a credit score – a number that they use to estimate the likelihood that you will repay what you owe and make your repayments on time.
In general, a higher score means you will find it easier to get the money you need. A poor score can result in a refusal or might adversely affect the terms. For example, it can mean that you pay a higher rate of interest.
To get an idea of how you might do, order a copy of your National Credit Score. It is based only on the information in your credit report, so it won't be identical to the scores generated by lenders, but it will set a benchmark for you. This should help you target your credit applications to products you are more likely to be approved for, resulting in fewer search footprints on your credit report.
Companies promising to repair your credit score do not have the authority to amend your credit report, so steer clear of them
8. Don’t let debts pile up
If you are in debt, it’s crucial that you pay your existing credit card bills and loan repayments on time – this helps to show potential lenders that you are in control and more likely to meet future repayments.
If you are struggling to cope with your debts, don’t fall for the old credit repair trick. Companies promising to repair your credit score are not credit reference agencies and do not have the authority to amend your credit report. Rather than spending money on services you don’t need, spend some time with some of Fool.co.uk’s resources for people dealing with debt:
Dealing With Debt discussion board
Get Out Of Debt page
Guide: How To Get Out Of Debt
Published on: 9 July 2007
