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Friday, 03 July 2015

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Check your credit history and be armed for future

You will have often heard references to your “credit history” and how important it can be to have a “good” credit history, but do you actually know what this means and what status your credit history is?

When you apply to borrow money a credit search is carried out in order to assess how well you have handled your money in the past and how likely you are in the future to repay the money if your application is successful.

For example, it will show any late monthly payments you made, the amount of your overdraft and whether you have exceeded your credit card limits.

Credit searches are not only carried out in connection with loans, they can be done in many circumstances including job applications, mobile phone contracts or when you ask to pay a bill by direct debit.

Most lenders will review your credit history over the past two to three years in order to reach their decision.

A good credit history can be the difference between an application being approved or declined; it is therefore recommended that you check your credit history to see how you currently score and, if needed, to help you get your finances back on track.

In addition, checking your credit history regularly can reduce the impact of identity theft or fraudulent credit applications as you will be able to act early. The two main credit companies used in the UK are Equifax (www.equifax.co.uk) and Experian (www.experian. co.uk).

Both offer a service whereby you can check your credit report and see your credit rating, and in some cases this can be done free of charge (subject to the companies’ terms and conditions which should be read carefully).

If your credit rating is lower than you would like, the websites can offer useful hints and tips to help you improve your credit score.

Some useful points:

Ensure that you always make your payments on time. When sending a payment through the post, ensure you allow enough time prior to the due date for the payment to reach the company and be processed on your account.

Remember that mobile phone contracts, interest-free credit and utility bills can appear on a credit search and any late or missed payments on these will appear in the same way that late payments on a mortgage or credit card do.

If you are unable to make your monthly payment, it is always better to be proactive and contact the company to arrange to make reduced payments until your financial situation improves, as this will reflect more positively on your credit history than missed payments would.


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