2009 has been a tough year financially and with lenders tightening their criteria, even those who had never missed a payment may have found themselves being refused credit.? It?s been especially hard for small business owners who need to refer to their personal credit history when making applications for extra funding for their commercial venture.
Neil Munroe from online credit information provider, Equifax, provides some inside knowledge on credit scoring.
Lenders are checking people?s credit files more thoroughly. It is no longer just about how good you are at repaying a debt; they are looking at the overall picture and signs of possible future difficulty. Even a single missed payment could now result in an individual?s score deteriorating ? and that could mean credit refusal at the worst possible time.
That?s why it?s vital to do everything you can to keep your credit score in tip top condition.? And the best way to do that is to make sure you?re aware of exactly what information is on your credit file and how it will impact on your ability to obtain new credit in the future.
How to improve your credit
? Make sure you are registered on the electoral roll, this is used for verification purposes.
? If your circumstances have changed and you have had difficulties keeping up with credit payments, then it?s important to say so. You can place a Notice of Correction on your credit file explaining the background to any arrears and a lender will review this when assessing any credit applications you make.
? If you?ve had a CCJ and it is now settled make sure the settlement is recorded on your credit file.
? If you have been refused credit, obtain a copy of your credit rating.? But DO NOT carry on applying elsewhere.
? Avoid carrying a balance that is more than 30% of your credit limit.? Lenders may view this as excessive debt.
? Set up direct debits and standing orders with your bank to ensure payments go out on time.
? Make sure any accounts you don?t need or use are closed. Dormant accounts could affect your credit score as lenders will view the total amount of credit available to you.
? Try to pay off loans and credit agreements ahead of schedule.? Lenders will look favourably on this.
? Lenders are looking for signs you are capable of repaying money.? So it could be worth considering opening an account to establish a credit history if you do not have many credit agreements.
And finally, get a copy of your credit report on a regular basis.? You can get a copy of your Equifax Credit Report free for the first 30 days by visiting www.equifax.co.uk.? This will give you immediate unlimited online access to your Equifax credit file, plus weekly alerts of any significant changes to it.? There?s also expert tips and advice to help consumers take the right steps to manage their finances and navigate through life?s challenges as well as an online dispute facility to help you correct any errors on your credit file simply and quickly. If you don?t cancel before the end of the 30 Day Free Trial, the service will continue at ?6.99 per month.
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