Improving your credit history
Whether or not you’re thinking of applying for more (or a different type of) credit, it’s important you manage the accounts you already have well, as every payment you make is recorded on your credit history. If you miss a payment or pay it late, a lender will see this when they check your report, and may be reluctant to lend to you as a result and the information stays on file for six years. Don’t forget your credit history doesn’t just include loans and credit cards: mobile phone contracts and pay monthly insurance will also show up, so it is important to keep up with those too.
If you have credit accounts that you no longer use it makes sense to close them before applying for a new one, as lenders will check how much available credit you have before approving any application. They may decide that adding further borrowing to what you already have available – even if you’re not using it – has the potential to make your overall repayments too expensive to manage.
There’s a chance that it’s not only your own history that’s had an effect on how lenders are assessing you, but also another person’s. If you’ve shared a financial product with someone else in the past, a joint mortgage with an ex-partner for example, you can apply for a notice of disassociation. This means that their credit history won’t be taken into account when you are individually applying for credit. You don’t want your application to be turned down just because an ex-partner is bad at managing their money.
Another thing that could have an impact on your credit history is a simple error you may not have even noticed. Perhaps one of your accounts has the wrong address or you’re not listed as being on the Electoral Roll. Contact the lender involved and/or the credit reference agency to get this error fixed. And if you notice a credit account you don’t remember opening, or that the amount that’s been spent is larger than you thought, there’s a chance you’ve fallen victim to fraud, in which case contact your lender immediately.
Before you apply
Try to avoid making multiple applications for credit within a short period of time as this might reduce your chances of being accepted - it could give lenders the impression that you’re desperate to borrow money. If you plan to apply for a mortgage within the next few months for example, you may want to hold off applying for a credit card or loan in the meantime.
For more information on checking your credit history click here.