Your credit score can affect your ability to borrow money – for example, when you apply for loans, mortgages and credit cards. Even mobile phone contracts can be impacted by your credit score and financial history.
If you credit score isn’t great, there are plenty of things you can do to build it up and look to also fix any errors that may be on your credit report.
WHAT IMPACTS MY CREDIT SCORE?
Your credit score is impacted by many different factors. Below we have listed just a few to help you understand how you can avoid negatively impacting your credit score:
Missing or making late payments will stay on your credit file for six years. So it’s important to keep on top of your payments. This is everything from your mortgage to your utility bills.
County Court Judgements (CCJ) (or a Decree in Scotland) will have a serious impact on your credit score. CCJs stay on your credit file for six years.
High levels of existing debt will show on your credit report, and this information is used by lenders when they are considering your application for credit products.
Also, applying for lots of credit in a short space of time will have a negative impact on your credit score.
CHECK YOUR CREDIT REPORT AND FIX ANY ERRORS
Everyone should check their credit report. This is not only to see their credit score, but more importantly to check there are no errors and that they have not been a victim of fraud.
Credit Reference Agencies are able to provide you with your credit report and credit score. UK Credit Ratings offers information on your credit rating, additional information about what lenders will look for on your credit file and also provides you with tools that can help you correct any errors.
Other Credit Reference Agencies are listed on the FAQs page on the Nextcredit website.
If you do spot any mistakes on your credit report, you can either contact the lender directly or contact the Credit Reference Agency to discuss the error.
If you feel that you have been a victim of fraud you should contact Action Fraud for the matter to be investigated thoroughly http://www.actionfraud.police.uk/
HOW TO IMPROVE YOUR CREDIT SCORE
If your credit score is poor, don’t panic. Now that you are aware of your credit score, you can take steps to improve it:
Register to vote – Your presence on the electoral roll provides valuable proof of your address to lenders. You can register to vote online or by post.
Consider closing unused credit accounts if you no longer use or require them.
Contact your bank to cancel credit cards that you do not use, this will also reduce chances of you falling victim to fraud.
Stop applying for credit until you’ve sorted out any problems on your credit file and improved your score.