There’s many reasons to keep up-to-date with your credit report. Any mistakes on it could hinder your application for a credit card, loan or mortgage.
But how important is your credit score? Well, it might surprise you to hear that it’s your borrowing activity – known as your credit history - that you should pay the closest attention to. After all, this is what lenders can see.
There’s actually no such thing as a universal credit score. Each credit-checking agency and lender has its own scoring system.
Put simply, your score is calculated from how positive or negative your credit history is.
For example, if you’ve previously missed payments, these marks will be highlighted on your credit history and this is likely to be reflected in a low credit score.
So now you know how important your credit history is, how do you check it’s up to scratch?
Let’s take a look.
Where do I sign up?
Your credit history is held by the credit checking agencies - Experian, Equifax and Callcredit. Every time you apply for a credit agreement - like a loan, credit card, mortgage or even a mobile phone contract - lenders access your credit history through one of these three agencies.
By signing up to at least one of them - or one of their free credit checking services, like Noddle or ClearScore - you’ll be able to view what lenders can potentially see about you.
"Late or missed payments will stay on your credit history for six years or so."
Negative footprints on your credit history can result in you being turned down for credit. Things like late or missed payments will stay on your credit history for six years or so. This is why it’s important to check your report regularly so you can be sure that all the information is correct.
Free credit checking services make it simple to keep tabs on your credit history. You can find out more about these services and how to sign up here.
My credit history needs improving
As we’ve mentioned, your credit history is a way for lenders to assess the risk of you failing to keep up with your repayments.
If you’ve previously struggled with your repayments, lenders may be less willing to lend to you.
But don’t panic – there are simple ways that can help you improve your credit history.
Perhaps the first step is to make sure all your personal details are accurate.
When you apply for credit, lenders need to identify you, so it’s important that you’re signed up to the electoral roll with your current address. This can prevent any delays when you apply.
Another idea is to close down any accounts that you’re currently not using – any old credit cards, for example. Some lenders might be put off lending to you if you have credit already available.
But, of course, this will depend on their criteria.
If you were to max out the credit limits you have, you might start to struggle with your repayments. As a result, some lenders might see you as a risk.
And if you owe money to any of your current lenders, make sure you keep up with your repayments each month. This will show future lenders that you’re a responsible borrower - which is great news for your credit score.
Check out our previous blog for more tips to improve your credit score.
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