Ten Tips To Get Credit

By Neil Faulkner | 19 October 2006

| 3 Comments

Debt breeds more debt, which can spiral out of control. (Um, I'm supposed to put a little humour into my articles, but I'm not sure how with an opening like that. A comedy thunderclap perhaps? I'll get the sound-effects team on it...)

But there's another credit spiral that can be equally bad - one where you can't even get credit when you need it.

This second spiral happens when you apply for credit several times in a short space of time. The more you apply for credit, the more likely you'll be declined for it. I have four tips to help you with this, plus Experian has given me six more bonus tips on improving your credit rating:

1. This first tip is rather subjective, but, I think, a useful exercise. You need to use your best judgement about whether you'll be accepted for a personal loan or credit card. I call this 'tactical credit applications'. If you know you're not the very best customer, apply for slightly worse deals.
   
   It can be difficult to know how far to go though. If your credit rating is not good, you shouldn't apply for the worst loans, as the interest rates can be a phenomenal 30% to 177% interest! So...
   
   
2. With a little effort you can improve your chances of being accepted; get a helping hand by asking other people for their experiences. You can do this by posting an anonymous message on our very busy, friendly and useful Dealing with Debt discussion board. Put the details of your credit history there. You can get these for free online by applying for a 30-day trial of CreditExpert.
   
   Then ask other board users with similar records if they could recommend a suitable lender, or give you some other tips. You can then find the provider in our personal loans comparison centre.
   
   
3. If you're shopping around for credit, ask companies for a quotation before making a formal application, so that it's not recorded on your credit record. It's a lot more effort, but it could increase your chances of getting a decent loan.
   
   
4. Rate tarts (people who hop between 0% credit cards) still manage to get credit, despite making numerous applications. The trick is to keep down your number of open accounts and to keep a low total credit limit. Even so, rate tarts get turned down more often than not, so the other tips still apply.
   
   
5. Make sure your credit report is up to date and accurate. If it isn't, contact the lender and/or Experian to amend it.
   
   
6. Check your report regularly to make sure you have not been a victim of identity fraud, which can impact your credit score.
   
   
7. Your credit report lists anybody with whom you have a joint account. So that you don't suffer from your ex-partner's diabolical credit history, ask for your record to be updated.
   
   
8. Don't lie on an application form, as lenders usually find out. Any inaccuracies on your application will tell against you, and cause difficulties in future applications.
   
   
9. Avoid credit repair companies. These are not credit reference agencies and do not have the authority to amend your credit report. Don't be tricked into paying for services you don't need or that you can get elsewhere for free.
   
   
10. Your credit report is not frozen in time. Check your report regularly to ensure it's accurate. That way, you can ensure there are no nasty surprises the next time you approach a lender.

Check your credit record: get a free 30-day trial of CreditExpert through The Fool.