Top 10 Credit Myths
Your credit score helps lenders decide whether or not to accept you for credit. By taking steps to improve it you could be in a better position to get the best credit deals on offer. It pays to make sure you achieve the highest credit score possible and there are a number of steps you can take to improve it.
When you make an application for a loan, credit card, mortgage or other type of credit (such as a mobile phone contract), lenders look at your credit report and may use the information contained within it to help them calculate your credit score when making their decision.
Review your report regularly to make sure it's up to date and accurately reflects your circumstances as mistakes could hold back your ability to get credit. In particular, check your financial associations with other people. If, for example, you find you're still financially linked to an ex-partner, you can break this link by completing a disassociation form which will stop their credit history affecting your ability to get credit - provided you no longer share any joint accounts.
Lenders use the Electoral Roll information (electoral register) as a precaution against fraud, to check that you live where you say you do. Make sure you are registered to vote at your current address - you can do this online with About My Vote.
Lenders realise you may not have a perfect credit score , but still want evidence that you will make repayments on time and that you aren't already overstretched. If they see a patchy credit history that shows missed repayments or bad debts, it suggests that you struggle to manage credit.
Stay within the agreed credit limits and make necessary monthly repayments on time, ideally paying more than the minimum off your credit cards each month if you can. Missed and late payments stay on your report for at least six years and may give lenders the impression that you could be a risk. If there's a genuine reason for past problems - maybe you were ill or going through a challenging time in your life - you can add a Notice Of Correction to your report.
Consider closing unused credit accounts if you no longer require them. Lenders can take into account the credit limits available to you, not just what you currently owe. Also try to keep the balances on your card accounts well within the credit limit. Lenders are likely to view low 'utilisation' as an indication of low risk, so this can really help your score.
It's better to have fewer, well-managed accounts, and long-standing accounts with good histories. Your credit report contains a list of your previous and current lenders - check yours online with Experian CreditExpert*.
A lender will likely check and leave a credit application search footprint on your report each time you apply for credit. Space out your credit applications and avoid making several applications close together as this could be a sign of financial stress to lenders, or even fraud.
Look out for unfamiliar or suspicious entries in your report, such as an account you didn't open, a sudden surge in the amount you owe or new credit applications you didn't make - they could mean you're a victim of identity fraud.
If you notice anything out of the ordinary, contact the relevant lender immediately and explain your situation - be prepared to provide evidence to support your case.
One of the best ways to stay in control of your finances is to check your Experian Credit Report with Experian CreditExpert.
Experian CreditExpert provides more than just your credit report, including: