Cleaning up your credit history

February 23, 2007 – 10:43 am

Clean up your Credit History When it comes to borrowing money from a bank or money lender it all depends on how you have handled any credit in the past. Being a bit sloppy and forgetting the odd repayment for a credit card, or going over you authorised overdraft can scupper your chances of being lent money again in the future. But some simple tips can help you improve your credit rating.

1. Getting to know your Credit Report – Your Credit Report is you financial CV. It is a detailed list of any previous/current credit you have, your repayment history, also if you have had any CCJ’s (county court judgements) and if you have ever been made bankrupt . This is the first thing lenders check when deciding whether to lend you money or not. So if you have never checked you Credit Report before then now is a good time to have a look; Experian offer a 14 day free look at your Credit Report.
2. When you look at your Credit Report, make sure you have a good look at it, is it up too date, does it accurately represent your current circumstances? If it doesn’t then get in touch with the relevant lender and ask them to update your records?
3. Register to vote at your current address, a lot of vendors use the electoral register to check who you say you are, if your address you give doesn’t match what is on the credit report you could be turned down when you make an application.
4. Your Credit Report has a section listing any financial partners, this can be people with whom you have/had shared a joint account with, mortgage or credit card. If in the future you apply for credit a lender may check your partners credit report in case their financial position could make it difficult for you to repay the money. So if you are separated or divorced, make sure your Credit Report reflects this, just let your credit reference agency know your situation has changed.
5. Every time you check your Credit Report or apply to borrow money, this leaves a ‘footprint’ on your Credit Report. So only make a application for something if you really need to. When other lenders see lots of footprints on a Credit Report, it can put lenders off and turn down your application.
6. A lender likes to lend money to people who can comfortably manage their repayments over time and are not struggling to keep up with multiple depts. If you have various credit cards, see if you can pay any off entirely.
7. The Golden Rule – always keep up with repayments, an easy way to do this is to setup direct debits with all the lenders you are borrowing money from, that way a payment will never be missed. If you are struggling to pay money back get in touch with the lender and let them know, often they can help you by changing to a more manageable repayment structure- never just ignore the bills.
8. Tell the truth when you are applying for money, if a lender finds a discrepancy with what you have told them and what is the truth they will decline you application, and it is fraud and could leave a black mark on your credit report.
9. The last thing to do is check your Credit Report frequently and make sure everything is up to date and correct.

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