Credit reports – improve your credit rating

Most people don’t know much about their credit report, and only attempt to find out when they need to improve it. The rating or score derived from your credit report is used by lenders to decide whether or not to lend to you, so it’s vital that the information it contains is correct.

Looking at your credit report is the first step towards improving it. Whether you’ve recently been declined by a lender, or if you’re afraid you may be because of your history, it’s time to take the bull by the horns.

It may not be possible to undo certain facts on your credit report, but there are several steps you can take to correct information that’s wrong, and add details that may be helpful.

The more accurate your credit report is, and the better you keep an eye on it to help manage your borrowing, the more likely you are to have access to affordable credit.

1. Know your situation

If you’re not sure you’ll be accepted for credit or be granted a favourable rate of interest, the old cliché “know your enemy” is the key. By familiarising yourself with your credit report you can see all the problems you’re dealing with, and begin putting you and your credit rating on more friendly terms.

The UK’s largest credit reference agency, Experian, provide a credit monitoring and identity protection service at www.creditexpert.co.uk. Sign up for a free, 30-day trial and you can begin work on optimising your report.

It’s important to remember that your credit report changes over time as your credit history evolves.

This means you should check your report regularly to make sure it’s current and correct. This should ward off any nasty surprises should you apply for any new credit.

2. Straighten out the facts

If you take a look at your credit report and something doesn’t seem right, it’s possible to rectify some discrepancies.

You can contact a company with which you have credit, or have applied for credit with, to update the following:

• If a credit account has been paid and is still showing as outstanding
• If a company has searched your report more than once in relation to one application
• If you have been linked to addresses with which you’re not connected
• If you have separated from a partner and broken off your financial association

If you see information on your credit report that you don’t recognise, it’s possible that it relates to fraudulent activity. The bogus information may include names you have never used, addresses to which you have no connection, or applications or loans which are not yours. To investigate this, contact Experian immediately.

IVAs (individual Voluntary Agreements) and bankruptcy will show on your credit report for six years after they are discharged. If you feel they are represented incorrectly, contact your IVA supervisor, or forward your Order of Discharge or Annulment to all credit reference agencies.

If you live in Scotland and have paid a Scottish Decree, the Registry Trust will notify credit reference agencies that it has been settled. Write to them with a receipt or letter from the relevant creditor, with a cheque for £4.50 to cover their search fee:

Registry Trust Ltd
173-175 Cleveland Street
London W1P 5PE

If you live in Northern Ireland and are unhappy with the way a judgement is recorded on your report, it’s best to contact the relevant court with your concerns.

The final and simplest part of your credit report to straighten out is confirming your address details. If you are not on the electoral roll at your current home, register straight away with your local authority.

There may be entire on your credit report that you feel need explanation, for example an account falling into arrears. You can add a notice of correction or a short explanation, which will be shown along with the account it relates to, to any lender viewing your report.

3. Keep your identity safe

Identity fraud drains an enormous £1.7 billion a year from the UK economy, and yet can be very difficult to detect. Some victims of identity theft notice long after the event.

Regularly checking your credit report can alert you to fraudulent activity as it happens, meaning it’s easier to stop and easier for the relevant organisations to investigate. If you notice entries referring to transactions that you have not initiated, contact the companies involved immediately and they will help unravel events and if necessary notify the police.

4. Tread carefully on your report

When you apply for any form of credit, the lender searches your report and leaves a record called a footprint. As these are visible to any other lenders searching your report, it’s best to limit the number of these footprints you allow to appear on your report. Lenders may see a host of applications on your report as a sign that you are getting desperate, that you’re overstretching yourself, or that someone else is trying to defraud you.

You can specifically request a lender not to leave a footprint by asking for a quote rather than a complete application. You can also ask them to remove records if they have accessed your records more than is absolutely necessary.

5. Tell the truth

Yes, this is obvious. But it’s vital to be as accurate as possible on application forms as inconsistencies (and any untruths you may have misguidedly told) will be flagged and may hold up or even halt any future credit.

6. Know your National Credit Score

When you make an application for credit, the lender involved takes the information from your credit report and uses it to calculate a credit score. Different lenders use different complex formulae to come up with this figure, and essentially use it to decide if you are likely and able to repay what you borrow on time. As you’d expect, the higher your score, the more credit-worthy you appear to lenders. A lower may mean refusal or a higher rate of interest to be paid on the credit they grant you.

Your National Credit Score is a generic score based solely on the information on your credit report. Although the calculations are made differently by those made by lenders, it’s a good indication of how your credit rating looks. In knowing this you can make informed applications for products more suited to you.

7. Manage your borrowing

If you have outstanding credit, the best thing you can do is the most obvious – repay it in full and on time, according to the contract you signed. Anyone checking your credit report can then see that you have everything under control and have taken a sensible, manageable amount of credit.

However, it’s not always that easy. If you’re finding it hard to meet payments on time or in full, it’s time to take action. Fortunately you’re on the right site to do so and can consult our articles on dealing with debt right away. Beware companies offering to “repair” your credit rating as they have no authority to amend your report and will invariably charge you too much for their services.

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