How important is your Credit Report?

Do you always struggle when it comes to getting credit and you don’t know why? If so, your credit report might have a major part to play in this. Your credit report essentially takes in to account all of your financial dealings and gives you a rating or a score. Having a good rating usually makes life easy when it comes it taking out a loan or purchasing goods on credit, however if your rating is poor then obtaining finance or credit can become equally as difficult. Having access to your credit report can help you understand and make improvements to your rating, increasing your chances of getting loans, mortgages, credit cards etc.

What affects a good/poor credit rating?

There are few key things which have impact on your credit rating and it is usually beneficial to keep on top of these in order avoid a low rating. However, if very little or no attention is paid here then the chances are these will impact your rating in a negative manner.

Levels of existing debt

If you already have a lot of existing debt you are paying off, then obtaining more finance or credit cards may be difficult, purely as the lenders would be reluctant to offer you further finance on top of any existing. So, it’s always best practice to clear up your finance as quick as you can before applying for more.

Missing or late payment

Always make sure you pay your finances in the given time. This is important as any missed or late payments mean you will have a default recorded on your report for six years, which will be accessible to lenders.

Multiple applications at once

Avoid making multiple finance applications at the same time. If possible try to apply at different times or the week or month. Making multiple applications and being declined will also be recorded on your file, leaving the lenders reluctant to make an offer.

County Court Judgement (CCJ)

If you have a CCJ due to unpaid bills then this could have a severe impact on your credit score as this would remain on your file for six years.

Electoral Register

Being on the electoral register can have a positive impact on your rating as this verifies your identity to lenders, therefore make sure you are on the register.

I don’t have any financial activity

It is not uncommon for people not to have any financial activity and therefore not have a credit rating. If this is the case then obtaining any finance can become very difficult, as a lender wouldn’t be able to predict your behaviour. In most cases it would be best to start off with registering yourself on the electoral register first if you haven’t already done so. Apart from this you may also want to apply for the credit building products out there, as these are designed for people who have poor credit history and you will have a better chance of being approved. Once you get hold of a credit building product then you can start to build your history going forward.

Who checks your credit report?

Typically, the main people who will check your credit report will be finance providers, so were ever you have applied for finance whether it’s a bank or any other lender. Before they make you an offer they will access your credit report to get a better understanding of your finance history and determine whether you are a responsible borrower or not.

Who is the right credit report provider?

There are number of different credit report agencies who you can get your credit report from, Experian, Equifax, and CallCredit just to name a few. Almost all the agencies offer a free trial followed by a monthly subscription.

It is also worth mentioning each credit report agency provides different benefits for the facility to one another, so make sure you shop around before purchasing.

Can my credit report be incorrect?

When you have received your credit report, always double check all your information on the file as there can sometimes be mistakes on there, either your personal details or then your financial information. If you do notice an error on your report, then immediately get in touch with the provider you received your report from as this could have an impact on you trying to obtain finance. Once you notify the credit report provider of any issues or errors on your file, they are then legally required to investigate any points raised.