10 ways to give your credit rating a make-over
Filed under: Your Rights
Here are 10 simple things you can do to boost your credit score and make yourself more attractive to the lenders.
1. Get to know your credit report
Lenders calculate your credit rating using data from your application form – for example, what you earn – and your credit report. This is the history of your credit accounts, such as cards, loans, your mortgage and even catalogue and mobile airtime accounts. It also shows your repayment record. Everything in it should be up to date and reflect your situation accurately, or your credit rating could suffer. It's free to see your Experian credit report with a 30-day trial of CreditExpert.
2. Look out for inconsistencies and errors
It could be something as simple as different lenders listing you under variants on your address – The Cottage, Wood Street, and 15 Wood Street, for instance – or a minor clerical error that shows an overdue payment you know you made. Either way, your credit rating could suffer, so ask the relevant lender to correct the entry. Be prepared to provide proof.
3. Show signs of stability
Lenders look for signs that you're a stable borrower, so you'll get a better rating if you live in the same place for at least three years. Equally, a steady job suggests you might be more reliable than someone who chops and changes. If you move frequently for work or have changed jobs in order to progress, be sure to explain the background when you make an application.
4. Register to vote
To guard against fraud, lenders compare the address you provide with your registration on the electoral roll. If they don't find you, you'll lose valuable points, so contact your local council and get registered at your current address. Remember to cancel any old registration at a previous address while you're at it.
5. Close unused accounts
It's not only a matter of how much you owe – lenders take into account the amount you could already borrow when they decide if you're a good bet for more credit. So go through your credit report looking for forgotten accounts that you can close down.
6. Explain yourself
Missed repayments can blight your credit rating. They stay on your credit report for at least three years, showing that you've failed to honour your obligations in the past. If there's a reason – such as an illness or accident – for any problems in your credit report, you can ask to add a note of explanation. Future lenders will see this and may take it into account.
7. Separate your finances when you split
If you apply for or take out a joint account, such as a mortgage, you and your financial partner will be linked on your credit report. That means your other half's credit report could be checked when you make an application – and if he or she has money problems after you split, you could suffer. When you're sharing out the DVDs and books, agree who takes on what debt, close the old account or accounts and open new ones. Then tell the credit reference agencies – Experian is the UK's largest.
8. Don't leave footprints
Never fire off applications at random, in the hope that you'll get a "Yes" from someone. Every application triggers a search of your credit report that leaves a record, known as a footprint. Other lenders may interpret these to mean you're desperate for money or even suspect a fraud, so always do your research thoroughly and only apply when you're sure you've found the right deal. If necessary, ask for a quotation search that doesn't leave a footprint behind. Check your credit report for credit application searches carried out by mistake or multiple searches on a single application and ask the lender to get them removed.
9. Protect your ID
ID fraud is booming during the recession, with criminals stealing personal data to impersonate innocent victims, take over their accounts, apply for new credit and run up bills in their names. The result can be devastating for your credit rating and take many months to resolve, so go through your credit report regularly for unfamiliar or suspicious entries. If you spot anything, contact the lender immediately and share your concerns.
10. Stay in control of your credit history
Regular checks on your credit report will give you a snapshot of what you owe and how well you're managing. They're especially important before you apply for any new credit – give yourself plenty of time to set the record straight if you find anything wrong, so you can ensure that your credit rating is good enough to get you the deals you want. It's free to see your Experian credit report with a 30-day trial of CreditExpert.