New research conducted for uSwitch.com shows that, despite the fact that three-quarters of consumers have applied for financial credit in the past, more than two-fifths of these have never actually checked their own credit report
– that’s over 15 million people.
More significantly, over half don’t think that their credit report has a significant impact on their day-to-day lives, however; a third of these people have been refused credit without being given any reason as to why. A quick check of their credit report could hold the answer.
What’s your credit rating?
It details your past financial behaviour, and is used by lenders to help decide whether or not to lend you money or let you take out a credit agreement – such as a mobile phone contract, or monthly payment plan for your car insurance. Amongst other things, it’ll include information like your name and address, whether you’re on the electoral roll and how much you currently owe to lenders - whether it be a credit card you used to buy a holiday on, or a sofa that you’re paying off monthly for a set period of time. It’ll also detail late payments on any of your current or past credit agreements over the last six years, and whether you’ve ever been declared bankrupt or entered into an Individual Voluntary Arrangement (IVA), a Debt Relief Order (DRO) – or their Scottish equivalents.
Why is it important to check your credit rating?
According to uSwitch.com, many consumers are unaware that credit reports have an impact on things like mobile phone contracts, buying a house and applying for a credit card or bank loan. Even if you’re approved for credit, if you have a poor or non-existent history of borrowing, you’re likely to miss out on the best deals and rates. Some employers even run a credit check on people applying to work for them (depending on the type of business), so it’s really important that you regularly check your report to make sure everything on it looks right and to get any errors corrected.
How to help improve a credit rating
There are some simple things that can be done to improve your rating. For example, make sure you’re listed on the electoral roll. Companies use the electoral register to confirm your identity, so if you’re not on it you’re at risk of being turned down. It’s a good idea to update your address on any accounts you have to your current one, including your bank accounts and things like phone contracts.
You can also close down any credit accounts or cards that you don’t use anymore, and set up direct debits to ensure you never miss a payment on your active credit cards or loans. Missed and late payments can have a negative impact on your credit score and make borrowing difficult in the future, so it’s important you take care to avoid this. For more information on improving your credit rating, have a read of our advice here.
Providing you make at least the minimum repayment – although we would recommend you repay the full balance off in full each month – spending on a credit card will gradually improve your credit score. Not doing so could risk further damage to your credit report. For more information on the Ocean credit card, including how to apply, click here.
Disclaimer: All information and links are correct at the time of publishing.