Once you've obtained a copy of your credit report, you'll be in a position to analyse and take the necessary steps in order to improve your standing.
Factors affecting your credit rating
Credit ratings are generated after considering a range of data about yourself and your financial borrowing history. There are a number of things which will affect your score and be highlighted on your credit history report:
- Existing debt If you have high levels of existing debt, the risk factor attached to lending you more money, and therefore over-stretching your finances, may be an issue for some lenders
- Missing/Late Payments Missing or making late payments on anything from your mortgage to your credit card or gas bill is likely to be recorded on your credit history for 6 years
- County Court Judgement (CCJ) If you've been served a CCJ at any point within 6 years, this will also show up on your credit score and have a major impact on your credit score.
- Rejections from previous applications for credit These are recorded on your file for 12 months, and repeated rejections in a 12 month period stack-up in a detrimental way to your score.
- Unused Credit Cards This impacts your eligibility for credit as lenders take into consideration the total amount of credit at your disposal when assessing the risk. br>
- Mistakes With companies desperate to reclaim lost funds, it's not uncommon for blackmarks to be erroneously applied to your credit score. This may be the result of a debt being accidentally transferred to you because of an address you've lived at, or simply a case of mistaken identity.
- Electoral Register Not being registered is a bad idea as it doesn't allow lenders to verify your identity as easily.
- Frequent Change of Address You are considered less of a risk if you have stability in that you've resided at one address for a number of years.
- Joint Credit If you're involved in any joint mortgages, credit cards, bank cards with someone with a poor credit history, the financial association of this person to you will have a detrimental effect on your overall score.
If you discover any mistakes or wish to challenge any of the data on your report, you should first of all challenge them with the credit reference agency. They have a maximum of 28 days to remove the information or at least reply with a reason as to why they decline your request. During this period the information will be marked as 'disputed', and as a result lenders are not allowed to rely on it when assessing your financial standing for credit.
Credit reference agencies get their information from other lenders. You can also speak directly with the lender which made the entry, in order to clear the dispute. Once an agreement has been made, you can demand that they inform the credit agency of the mistake in order to have the information removed.
Furthermore, if there's data on your file which is accurate but doesn't give a true representation of your current standing, you can add a 'note of correction' (up to 200 words) to the report, which is to be taken into account by lenders. For example, it may explain a situation where you were made redundant temporarily, and as a result fell behind with some mortgage payments.Image: © Danielfela | Dreamstime.com