Why it's important to check your credit history


Why it's important to check your credit history

If you’ve ever applied for a mortgage, loan or credit card, you may have accessed a credit reference service like Noddle or Equifax  to view your credit history – or at least you should have!

Your credit history acts as a guide for lenders to whether you’re likely to keep up with your repayments based on how well you’ve managed credit in the past. So, if you’ve ever missed a payment, for example, this will show on your report.

But do lenders always let us know when something we do leaves a negative mark on our credit history? In this blog, we answer this question and explain why it’s important to regularly check your report.

Why check?

One reason to check your credit history regularly is that a mark left by something like a missed payment can negatively impact on your ability to borrow in the future.

You might think that if you’ve been late with or missed a payment your lenders will inform you. Unfortunately, this is not always the case.

If you don’t review your credit history regularly – you could be surprised to have an application for credit refused in the future - especially if you’re under the impression that your credit history is perfect. It’s important to check it regularly so you’re not shocked by any negative marks on your report.

And if in the past you have struggled to keep up with repayments, lenders could see you as a risk. If you haven’t kept up with your payments to previous lenders, what guarantee do they have you’ll keep paying them?

Signing up with a credit reference agency lets you check your credit history whenever you like. And if it’s in a less-than-perfect state, you can take steps to repair it.

Is there an error on my credit history?

The information on your credit history should be accurate. However, that’s not to say that mistakes can’t happen.

If you do notice a mistake on your credit history, you’re well within your rights to have the error rectified.

Our previous blog explains how to go about disputing and having an error on your credit history corrected.  

Am I victim of financial fraud?  

So while it’s vital to check for mistakes, reviewing your credit history is also an important step in making sure you don’t become a victim of identity fraud.

As mentioned above, checking it regularly enables you to monitor all of the accounts that have been taken out under your name and the activity on each of these accounts.

So, if there is anything that looks unfamiliar on your credit history – like a payment you don’t remember making, for example - you should investigate and contact the lender concerned.

How can I improve my credit history?

If there’s a negative mark on your credit history – like a late or missed payment - it will show there for six years or so.

This means any lenders you apply to during this time will be able to see it, and you’ll need to bear in mind that they could deem you a risk. If they do, your application may be turned down.   

That is not to say that a late or missed payment would always affect you applying for a mortgage or loan. Each lender has its own set of criteria.

As we said at the start of this blog, it’s worth frequently checking your credit history. This way it will be in good shape for when you apply for credit in the future.

And remember - the likes of Noddle and ClearScore allow you to check your credit history for free.