Whether a mortgage, a credit card, car finance loans or mobile phone contracts, your credit report plays a major role in the decisions lenders make when you apply for credit. It’s a summary of your credit history, so it’s in your interests to ensure that it is accurate, up-to-date and in good shape.
Making little changes to improve it can potentially make a big difference; not only to getting credit, but also to the interest rates you could be charged. Your credit report is of course only one part of your application – lenders also use the information provided on your application form, and information that they already hold on you (for example, if you’re applying through your bank).
1. Staying within your credit limits and paying your credit bills on time can help not only keep your ‘head above water’ but could actually improve your creditworthiness. If you miss or make late payments, it stays on your credit report for at least six years which can have a big impact.
2. Reviewing your credit report regularly, and making sure it’s up to date and the information on it is accurate, is very important too. If you do find anything that needs correcting, contact the relevant lender and ask for an amendment – Experian can also raise a dispute on your behalf. Even small details like the way your name and address is recorded could have a significant impact.
3. To help lenders confirm that you are who you say you are, and live where you say you live, make sure you register to vote at your current address, as lenders use the electoral register to help them with this kind of information. Having at least 6 years’ worth of addresses ensures that all of your accounts are included.
4. If you need credit, don’t apply to several card/loan providers at the same time in the hope that one will come up trumps. Each application is recorded on your credit report and if lenders see lots in a short period, they could think that you’re in financial difficulty, or suspect a rash of fraudulent applications.
5. Lenders’ credit scoring can also look at the average age of your accounts, awarding extra points for longstanding relationships, so try not to chop and change all of your accounts on a regular basis.
The Experian Credit Score is a guide to help you understand your credit report, and how the way you’ve managed the credit you’ve had in the past might affect applications you’re making now, and can give you an indication of what kind of loan you might get. Getting your credit score up could open up the potential to get better loans – and at better rates.
You can find more tips and helpful guides on a number of credit-related topics, as well as our popular Credit Cafe video series, at Experian’s Improve website.