Why you need to check your credit rating before you apply for credit


Why you need to check your credit rating before you apply for credit

If you’re not sure what a credit rating is then you’re not alone as almost 40 million people* in the UK are just as puzzled. A credit rating shows the amount of credit you have; it estimates your ability to repay credit; it helps lenders to decide an interest rate to offer you, and it helps you to identify if you’ve been a victim of fraud.

Are there mistakes on your credit file?

Research* on behalf of Ocean Finance found that over 32 million people have never checked their credit files. The main reason people haven’t checked theirs is because they’re reluctant to pay for a service such as Experian or Equifax.

Almost 13% of the people we surveyed confessed they had no idea they could check what lenders can see about them, and another 1 in 3 wrongly believed they couldn’t change it anyway so it wasn’t worth checking.

To find out how you can improve your credit rating click here >

Boost your chances

For so many people to not be clued up about their credit files is concerning, especially considering that almost nine million people in the UK are planning to take out credit in the next 12 months, including mortgages, loans or credit cards. Not checking your file for mistakes and getting them fixed could potentially mean you get turned down for credit that you would have been approved for, had your file been correct.

Keep checking

It’s important to remember that you can check your credit file as often as you like, as checking your own credit file doesn’t leave an imprint and it will help you to spot any irrelevant information and correct it. If you know that you’ll be applying for a mortgage in six months’ time, for instance, why not check your file now? If there are mistakes, you should have time to get them fixed before you apply.

Word of warning

When a lender checks your file, they leave an imprint, so you could potentially damage your chances of being accepted if you make several applications for credit once, as lenders may think you’re desperate for money. If you’re planning to apply for a loan in the next few months, you’re best staying away from any unnecessary credit card applications, as these could scupper your chances.

Find out more about Ocean credit cards >

*Red Dot questioned a nationally representative sample of 2,000 adults aged 18 and over on our behalf, between 17th July and 23rd July 2015, of whom 634 were Scottish residents. Figures have been extrapolated to fit ONS 2014 population estimates of 51,436,298 UK adults.