Money worries are something almost everyone has been through, so knowing that you would be able to secure a loan in an emergency can be a real comfort when such concerns arise. But whether it is a credit card, a mortgage or a loan, most companies will use your credit score as a guideline when deciding whether or not you are a trustworthy borrower. How many of us are really that aware of what is on our credit file? And how can we be sure that what is there is accurate? The only way to be certain is to keep a regular check on what is being said about you in your personal credit file.
It is important to note that you can check your credit score as often as you like; it will not impact on your ability to borrow. But when you’re checking, what exactly should you be looking for?
The first thing to consider is whether the basic information on your credit file is correct. Your full name and date of birth should be present, in addition to your current and previous addresses. A simple mistake such as an incorrect or missing address can arouse suspicion and see you earmarked as a poor prospect for borrowing, so it is essential to make sure credit-score companies have the correct information on file. Indeed, simply making sure you are on the electoral register can have a positive impact on your potential lending, as credit-score organisations use this as a key indicator to prove you are who you say you are.
When working through a credit checklist, it is really important that you are on the lookout for any inaccuracies or oddities, as these could be a sign of fraudulent activity in your name. Are there credit cards on there that you don’t recognise? Loans that seem unfamiliar? An unusual number of missed payments? Unfortunately, identity fraud is a very real threat, but keeping a constant eye on your credit file can alert you to the danger sooner rather than later. If you have been the victim of such theft, your credit file will reflect this in order to let lenders know that there may well be discrepancies in your financial past that will not form part of your financial future.
One key thing that is reported in your credit file is your success in making repayments on time. There should be a list of both current accounts and credit cards, outstanding loans and details of your utility providers. Of course, you should always make your payments on time, but if this is not always possible be aware that both missed and late payments will be indicated on your credit file and will remain there for a number of years. However, clerical errors do occur, so if you think that a missed or late payment has arisen because of something out of your control, you may want to pursue the matter in order to keep your credit file looking as positive as possible.
It may seem obvious that missed payments will limit your chances of borrowing, but did you know that reaching 70% of your overall credit card limit can also trigger an alert? It is advised that you always stay below 30% of your credit card’s limit in order to maintain a reputation as a responsible borrower.
One of the most difficult things about keeping control of your own credit score is that sometimes you have to consider the financial behaviour of others and how it impacts on you. If you have a financial connection to a partner or a loved one such as a joint mortgage and they have financial problems, this can be noted on your credit file. Making sure that information is accurate and up to date can protect your chances of borrowing if you feel it is necessary.
Securing borrowing can be really difficult – increasingly so in recent years. But following these tips taking control of your credit score can really make a difference when it matters the most.