Is your credit report in good health or is it in need of a little TLC? Here we look at what a credit report is, how you can improve it, and how you can keep an eye on your credit report completely free of charge with Noddle.
Whenever you apply for credit such as a loan, mortgage, mobile phone contract, or even when applying for some jobs, a search is done to check your creditworthiness. And depending on the result of the search and your credit score, it will determine whether you can go ahead with the credit agreement or are refused.
- What is a credit report?
- What is a credit score?
- How is your credit score worked out?
- Why is it important to keep an eye on your credit report?
- How can you improve your credit score?
- How you can check your credit history for free – forever!
Your credit report or credit file as it is otherwise known is a collection of information held by credit reference agencies about your financial history and behaviour. It will start when you’re 18 and will show a history of the last six years.
The information on your credit report is made up of a number of sources including credit card companies, banks, and collection agencies.
It’s the information held on your individual credit report that a lender uses to make a decision on any application you make to borrow money.
A credit score is based on your credit history and lenders will use that credit history as well as their own scoring systems whenever you apply for credit.
Lenders use this to make sure that for any money you borrow, you will be able to comfortably pay it back each and every month.
What does a credit score do?
The credit score calculated by the lender will tell them whether they are going to lend you money or not.
Your score will also suggest how much money they will let you borrow (your credit limit or maximum loan amount) and what interest rate you will need to pay.
The higher your score, the more likely you’ll get approved with a high limit and lower interest rate.
Each company that runs credit checks, whether that be a bank, credit card provider, utility provider, subscription TV service, mobile phone provider or insurance company, will have different criteria they use to work out your score. This is why you may sometimes get approved for one form of credit but not another.
They will use information held in your credit report, details you put in your application (such as your income and how long you’ve been in your job) and if you have had any other products with them in the past.
However, remember that each lender has their own criteria and some will use these specific criteria as well as the information in your credit report to make a decision on whether to lend to you.
Each credit reporting agency calculates the credit score using a different range of numbers. The higher the number within the range usually means the more likely you’ll be able to borrow money.
Checking your credit report as a one-off is all very well and good to give you a snapshot of your history at that point in time, but I would definitely advise you to keep checking it multiple times a year, especially if you are thinking about taking credit out in the future.
Just a simple mistake on your credit report may mean you are unable to obtain a mortgage or even a bank account!
Is there a gaping error on your report? Are you linked to an ex who is no longer in your life? You can get these things corrected.
If you are linked financially to an ex-partner for a loan, joint account or mortgage then you need to have this link removed.
Firstly, you will need to ensure all accounts are dissolved and transferred into a single name. Once this is done, you can contact the credit referencing agency that holds the details of your report and ask for a Notice of Disassociation. This will stop your credit file is linked with your ex.
Protect against fraud
Has someone applied for a credit card in your name? If you haven’t checked your credit report then you may not know! Then when it comes to borrowing money for any reason you could get turned down straight away!
Don’t get caught out by fraud.
If there is something showing on your report that you don’t recognise or don’t remember opening then you may have a problem – but it’s not one that you can’t get fixed.
Contact the provider that it says you owe money to and let them know what’s happened (don’t be angry at them as it’s not their fault). They will be able to help you sort it out but you are going to need to work to get your history fixed.
Using credit responsibly is one of the best ways to keep your score high, allowing you more of a chance to borrow money.
Here are some ways to boost your credit score:
Make payments on time, every time
If you want a healthy credit file then one thing that will have an impact is whether you pay the money back you promised.
The odd late payment here or there won’t look great but what’s worse is a credit history that shows repeated missed payments and defaults. These missed payments will stay on your account for six years from when the debt is settled so it will certainly follow you around! Lenders could assume that you aren’t able to manage your money and so they may not trust you with theirs.
Don’t overspend your credit limit and do make your repayments every month. If you can’t make the payment date you could always ask your current lender to move it to a better time (say on payday) which will mean you’ll have plenty of money in your bank account to cover at least the minimum repayment.
Register to vote
Not only do you want to register to vote so you can have a say in the elections and shape policies and politics locally, nationally and even in the EU, but it will help improve your credit score.
Being on the electoral register is one of the things lenders love. It proves you live where you say you do and it reduces the chance for any fraud.
If you’re not already, make sure you register your right to vote.
Apply for credit
If you’ve already had a number of credit cards, loans or a mortgage then this is not for you.
However, if you’ve never had credit you may also find that you have a low score. Consider getting a credit card, buying something with it each month and paying it off in full. This way you won’t have to pay any interest but your credit history will show that you pay back the money you borrow, which could increase your score.
Don’t apply too often
Every time a search is made on your history, a record of this is kept. If you apply for 10 credit cards at the same time, it makes you look desperate for money, the lenders will look at this negatively and will probably not lend you more.
Instead, try to space out the applications you make or don’t make more than one application at a time.
Some credit reference agencies offer a free trial where you’re able to access your credit file for 30 days. Once the 30 days are up you either need to carry on paying a monthly subscription or cancel.
If you don’t cancel you will be looking at a monthly charge of around £15 for access to your credit report. Now if that sounds like one payment too far coming out of your bank each month don’t fret as there is a service that allows you to access your credit file for free, for life!
Free credit report access for life
Noddle, which is part of the Callcredit Group provides a trusted FREE for life monthly credit reporting service. And with over two million people using their service, it’s one I strongly advise you to take advantage of too. For a very reasonable annual fee, you can also buy add-on products such as Noddle Alerts, which will let you know if any change has happened in your credit report each month and flag up if anything seems amiss.
Providing a monthly comprehensive overview of your financial situation, the FREE credit reporting service from Noddle will allow you to not only keep on top of your credit situation, but it will also assist in preventing potential identity theft situations.
With the FREE report at your disposal, you will have access to financial information including your current credit score and what it means, existing credit account information, six-year payment history and recent credit searches.
Whether you’re thinking about buying your first home, opening a new bank account, or even paying for insurance by instalments; knowing your financial situation and creditworthiness is a must in our current climate.
Written in collaboration with Noddle