If you’re going to apply for credit in the near future, then you need to know how important your credit history is and make sure it’s accurate.
If you’ve never checked it before then checking it for the first time may seem like a bit of a minefield, but don’t worry, our simple guide is here to help.
What’s my credit history?
Your credit history provides information on your borrowing past that lets lenders see how good you are at making payments on time – on everything from loans, mortgages, credit cards, mobile phone contracts and even, in some cases, utilities bills and rent payments. Every payment you make is marked on your file, along with whether it was late or on time and whether you paid the right amount (or too little).
Lenders can also see how many sources of credit you already have and what the available credit limit is. For example, if you already have lots of credit available to you, such as several credit cards, a new lender may be reluctant to lend to you. This is why it’s important you cancel any cards you no longer use.
Lenders use your credit record when they are trying to assess how likely you are to re-pay any money they lend to you: in other words whether you are a good risk or not. It isn’t just traditional lenders that use it though, mobile phone providers may check before deciding to offer you a contract and insurance companies may check before quoting for pay monthly insurance.
Any credit problems like missed or late payments or defaults and CCJs will show on your credit history for six years. If you have a poor credit history then you may find it harder to be accepted for credit but some lenders may still be willing to lend to you. For instance, the Ocean credit card is open to those with a less than perfect score. Of course before you borrow any money you need to think carefully about doing so and ensure that you can afford to make the repayments. Not only will missing payments damage your credit history, you could incur additional interest and charges too.
How can I check my credit history?
There are three credit reference agencies who hold your credit history: Equifax, Experian and Call Credit. If you want to check your credit history online you could sign up for a free 30-day trial with Equifax or Experian, however, if you don’t cancel before your trial ends then you’ll be charged £14.95/£14.99 automatically, every month until you do. If you use Noddle (Call Credit) then it’s completely free, so you don’t need to cancel.
Alternatively for £2 you can ask for a statutory report from one of the credit reference agencies, which will be sent to you.
Once you have access to your credit history you can check to see if there is any information on there that is incorrect – for instance, your address might need updating or one of your lenders might have misspelt your name. If you find you’ve been financially linked to an ex-partner then their credit history will be impacting on yours so you can apply for a notice of disassociation as long as you no longer share any financial products together (e.g. a mortgage or a loan).
Marks on your file
It’s important that you don’t apply for lots of credit all at once because every time a lender looks at your report a mark is left on your file. Lenders may be wary of lending to people who they judge as being ‘desperate for money’ so it is much better to make one application and wait and see if you are accepted or not before deciding whether or not to apply again.
If you check your credit report then this doesn’t affect your report in a negative way at all as it doesn’t leave a mark. You should try to check your credit history regularly, especially in the run up to applying for credit. If you do spot anything on there that isn’t right then you can apply for the information to be changed.
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