Search: Why your credit rating's important
- Improve your credit rating
- Best loan deals
Now more than ever it pays to be savvy when it comes to getting the credit you need to run your life. Luckily, you don't have to be an expert to stay on the money. These simple steps could help you find financial success.
Do know what you owe
In the current climate, you need to know exactly where you are before making plans - and what you really owe could come as a wake-up call. Instead of wading through files and old bills, you can find your credit accounts, from credit and store cards to loans, mortgages and even mobile phone accounts, listed in your credit report, along with your repayment record.
Don't stick your head in the sand
The worst thing you can do is nothing. Interest could be mounting up on borrowing you've forgotten, so you could end up owing even more in the long run.
Do keep up with your repayments
It can be tempting to skip the occasional repayment if you're having a tough month but you could rack up penalties and interest - and it will be recorded on your credit report for at least three years, where lenders will see it when you make a new application.
Don't be afraid to talk to your lenders
If you're having financial problems it's in their interest, as well as yours, to come up with a sensible solution. Together, you may be able to agree a new schedule of affordable payments, although this may mean that it will take longer to clear what you owe.
Do your research
When you need a card, loan or credit account of any kind, research what's on offer - visit personal finance and price comparison sites to see what's out there and what matches your circumstances. You'll stand a better chance if you ask for an appropriate and affordable deal.
Don't take a scattergun approach
There's no point in firing off lots of applications in the hope that one of them will succeed. Not only could you get turned down, but you could damage your credit rating in the process. Each application will trigger a search by the lender and these leave a record on your credit report.
If other prospective lenders see a lot of these, they could fear you're overstretched, out of financial control or even suspect a fraud.
Do shred before you bin
ID fraud is one of the UK's fastest -growing crimes, so make sure thieves can't get hold of personal or sensitive information from your rubbish and use it to borrow money in your name or max out your accounts.
Don't put too much in the recycling
You may think you're doing your bit for the environment but you could also be offering a free gift to a thief. Remove the address or account information from all letters and documents before you put them in the box - even an old catalogue could put your ID at risk if a bin raider picks it up.
Do check your credit report regularly
Lenders look at your credit report every time you apply to them and when they're setting interest rates and other conditions, so it pays to be sure that all the information it contains is up to date and accurately reflects your situation. You'll also be able to spot suspicious applications or transactions that could indicate attempted ID fraud.
Don't assume everything's okay
If you haven't received any payment demands or red bills, don't assume you have a good credit rating. A simple clerical error or misunderstanding could damage your credit status, so make regular checks on your credit report part of your financial routine.
A credit monitoring like agency CreditExpert can help - members receive an email or text alert every time there is a significant change, like a late payment recorded by a lender or a large change to a credit account balance.
Do put a shine on your credit history
If you can demonstrate that you are a responsible borrower with a stable lifestyle, you have a better chance of getting the deals you want. You can improve your credit status by taking simple steps - for example, ask lenders to correct any errors in your credit report, close unused accounts and register to vote at your current address.
Don't assume the past is over and gone
If you've been bankrupt, taken out an IVA or had court judgments against you for debt, the evidence remains on your credit report for at least six years and even a missed repayment can be seen by lenders for at least three years.
If special circumstances, such as illness, an accident, redundancy or divorce, were behind any past problems, you can add a note of explanation that lenders may take into account when deciding whether to make you an offer.
Do ask for help
If you're having problems, get free, professional advice. Try Citizens Advice at www.adviceguide.org.uk, National Debtline at www.nationaldebtline.co.uk or the Consumer Credit Counselling Service at www.cccs.co.uk.
As well as offering advice on how to manage and reduce your debts, these organisations have the legal right to negotiate with creditors on your behalf.
Don't be tempted by offers that are too good to be true
There is no magic spell that will allow you to walk away from money troubles without any consequences and only you can sort out your credit status, so be wary of miracle cures for your financial ailments.
They almost always cost you money you can't afford and don't deliver anything you can't do for yourself, with the help of a charity or publicly funded advisory body.
To view your personal credit information that lenders are currently basing their credit decisions on, apply now for a free online credit report. Click here for a free 30-day trial and a free copy of your Experian credit report
