Don’t neglect your credit score, it is one of your most valuable assets. Lenders use it when deciding whether or not to lend to you and it can dramatically affect the rate of interest you pay. So make sure yours is in good shape.
1. Regularly check your credit score
A credit report (also known as a credit file) contains information that has been compiled by a credit bureau about your credit history. This information is collated from a number of sources and includes information on what you currently owe, how well (or badly) you have managed credit in the past and, whether you are registered on the electoral role. When considering an application for credit, as well as scoring you against their own criteria, lenders may refer to one or more credit reports on you.
You can check credit files held on you by getting a credit report from any of the UK’s main three credit bureaus - Equifax, Experian and Callcredit - or from one of the third-party agencies that use their data. When you get hold of your report, make sure you check it, thoroughly.
2. Correct any mistakes
If you do find any errors, tell the credit agency immediately. The credit agency is legally required to review any issues you raise. Any negative information should only remain on your record for six years, so make sure it’s up-to-date. If you do need something to be corrected or clarified, you can ask for a note to be put on your file. This can be useful when it comes to explaining extenuating circumstances regarding problems or if, for example, a debt issue is later resolved.
3. Get on the Electoral Roll
Make sure you are registered at your current address. If you are not it can cause delays when you apply for credit; some firms may turn you down if they can’t confirm your address.
4. Be a good borrower
Every missed or late payment, whether it’s on your mortgage, credit card, personal loan, or even mobile phone or utility bill, will show on your credit file for six years, so make sure you pay on time. Set up a direct debit so you don’t miss payments.
5. Make yourself more attractive
Prospective lenders look at your history of repaying previous debts as a way of indicating your ability to repay new borrowing. If you have no prior history to point to, there are credit builder products available. These products tend to attract higher rates of interest, but if you clear the balance in full each month that shouldn’t be too much of an issue.
Other factors that can have a positive influence on your credit score include a settled period at the same address, a history of long-term employment, an increasing salary, being able to provide a landline number, rather than just a mobile phone number, keeping your bank account in credit and staying within your agreed overdraft limit.
6. Take care with joint accounts
Your ability to obtain credit may be affected by who you are financially associated with. If you have a joint credit account or a mortgage with a spouse, partner, friend or family member, then you are what is known as ‘financially associated’ with them.
That means that their credit rating reflects on yours, and vice versa. If you no longer share a financial connection with that person then you should make sure your credit histories are also separated.
Always make sure that your credit history is separated from an ex-partner’s, for example, and make sure that the information held by the credit bureaux is an accurate reflection of your current circumstances.
The value of investments and the income from them can go down as well as up, so you may not get back what you invest. This information does not constitute investment advice and should not be used as the basis for any investment decision nor should it be treated as a recommendation for any investment or action. You should regularly review your investment objectives and choices and if you are unsure whether an investment is suitable for you, you should contact an authorised financial adviser.