Is your History Spotless?

 Equifax offers advice on what makes a good Credit Score

Research by leading instant online credit information provider, Equifax, has revealed that over a third of consumers surveyed had been turned down for a new credit card  and 27% of those thought it was because they had a poor credit rating.  With credit scores still playing a crucial role in consumer lending, Equifax is urging consumers to review their credit rating to ensure they are in the best position when applying for new credit – whether it be a really good deal on a credit card or line rental for a mobile phone. 

“Lenders make checks with credit reference agencies to see whether an applicant has kept up to date on repaying their credit” explained Neil Munroe, External Affairs Director, Equifax.  “They also use a ‘credit scoring’ system to decide whether on not to lend to consumers.  So it’s vital consumers keep up to date with repayments and ensure their rating is in top condition. 

“Having several credit cards with high limits and missing repayments can be cause for concern for lenders.  Such discrepancies can result in an individual’s score deteriorating and them, therefore, being unable to obtain new credit.

“However, not all is lost for consumers who score poorly.  At www.equifax.co.uk we offer online advice to people looking to improve their overall credit score. After all, it could be something as simple as not being registered to vote which is affecting their score.  But even if it is something more serious, our expert advice is available to help consumers get back on track”.

TOP TIPS TO IMPROVE YOUR CREDIT SCORE

1. Are you Registered?

The electoral roll is used by many companies for identity verification purposes in order to combat identity fraud. It is vital, therefore, that you are registered on the electoral roll at your current address.  

2. Are you credit active?

Not having many credit cards or loans can affect your credit score.  Lenders are looking for signs that you are capable of repaying money you have borrowed. So it’s worth considering opening an account to establish a credit history – even if you pay it off in full at the end of every month.

3. Change of Circumstances

If your circumstances have changed and you have had difficulties keeping up with credit payments, then it’s important to say so, for example if you were made redundant or recently divorced and have fallen behind on credit repayments.  You can place a Notice of Correction on your credit file explaining the background to any arrears, especially if you have now got back up to date.  A lender will review this when assessing any credit applications you make.  

If you believe a lender/company has provided incorrect information on your credit file, you can raise a Notice of Dispute with the Credit Reference Agency and they will take this up with the lender.  This will usually be resolved within 28 days.

4. County Court Judgments

If you’ve had a CCJ and it is now settled make sure the settlement is recorded on your credit file.  If not contact the court to get confirmation details and inform the credit reference agencies, otherwise it will stay on your file for six years.         

5. Defaults

If you have a default on your credit file, it will stay on your file for six years and will affect your credit rating.  This is when you can use a Notice of Correction.

6. Stop Applying

If you have been refused credit, obtain a copy of your credit rating.  But DO NOT carry on applying elsewhere. Each search by a lender will leave a “footprint” on your credit file.  Too many searches in a short space of time can be perceived by lenders as you over-stretching yourself financially and could therefore negatively affect your score.

7. Avoid a high balance

Avoid carrying a balance that is more than 30% of your credit limit.  Lenders may view this as excessive debt and that you may not be able to keep up with repayments.

8. Be Direct 

It’s easy to forget a payment so setting up direct debits and standing orders with your bank will ensure payments go out on time.

9. Close it Down 

Make sure any accounts you don’t need or use are closed.  Financial companies are paying more attention to the total amount of credit available to an individual and whilst you may not be using them, dormant accounts could affect your credit score.

10. Early Bird Catches the Worm

Try to pay off loans and credit agreements ahead of schedule.  Lenders will look favorably on this.

Equifax recommends that anyone planning to make a new credit application obtains a copy of their credit file so that they can see exactly how their address is shown.  This is how it will be checked by lenders.  And if they believe the address is not properly presented, they can ask the credit reference agency to take this up with the lenders and the local authorities.

The Equifax Credit Report, with the facility to access credit information for the first 30 days free, is accessible simply by clicking here. Designed to help individuals understand their credit file and see what lenders see to assess new credit applications, the Equifax Credit Report also includes expert tips and advice to help consumers take the right steps to manage their finances and navigate through life's challenges.

If the customer does not cancel before the end of the 30 Day Free Trial, the service will continue at £6.99 per month, giving them unlimited online access to their credit information and weekly alerts on any changes to their credit file. It also includes an online dispute facility to help them correct any errors on their credit file simply and quickly.

Survey conducted January 2011 of 2,380 Equifax members

Moneyextra.com recommends you take independent financial advice before acting on any article

2011-10-06 09:46:36 © Moneyextra.com