Thursday, 16 July 2009

How can I improve my credit rating?

posted by debts.org at 03:18

In days of recession and credit crunch, your credit rating or credit report is more important than ever. Read these handy tips to help you get the credit deals you want:

1. Check your own credit report

Your credit report tells lenders all they want to know about your borrowing and repayments, but not everyone realises you can check your own credit report before applying for credit cards, loans or mortgages. Check your credit report regularly and free of charge with CreditExpert.

2. What are lenders looking for on my credit report?

Lenders know you are unlikely to have an unblemished record, but they want to make sure you are stable and reliable, and can afford to pay back any new loan, on time and regularly. A credit report showing missed repayments or bad debts means you could let them down too and they may not be prepared to take that risk. If there was a particular reason for missing payments such as a divorce or a death in the family, it may be worth noting these down on any application for credit.

3. Always close unused accounts to help your credit report

If you have unused accounts still open, then close them. Lenders could take into account the amount you could borrow, and not just what you currently owe. A few, well-managed accounts will look much better on paper than several unused accounts. If you are not sure whether you still have unused accounts, you can check on your credit report.

4. Debt consolidation could help your credit rating

Consider consolidating your debts. Work out which credit accounts are proving the most expensive and see if you can move them to one single loan. A 0% balance transfer for credit cards is also a good option, but make sure you read the small print. This could give you up to a 12 month interest free period, when you can reduce your credit card debt.

5. Should I register to vote to improve my credit report?

Yes. Lenders will use the electoral roll as a precaution against fraud, and to check that you are registered at your current address. If you are not registered on the electoral roll, you may be asked for further proof of address or identity, or even turned down altogether.

6. Don´t be pressured by lenders

When you are researching the best credit deals for you, make sure the lenders know you are only looking for information to start with, and don´t be pressured into signing something you don´t fully understand. Also, every application for credit triggers a search of your credit report, which will leave a record. If you make several credit applications, it could indicate on our credit report that you are desperate for cash, and be off-putting to lenders.

7. Protect your ID in your credit report

Watch out for any unfamiliar or suspicious entries on your credit report, which may not refer to you. Check carefully and make sure there is no record of a bank account you didn´t open, a massive rise in the amount you owe, or credit card applications you didn´t make. Identity fraud is becoming more common place and if it happens on your credit report, or your credit rating, contact the relevant lender as soon as possible, explain your position and provide proof, where possible that you are not responsible. Check your Experian credit report online with a free trial of CreditExpert, the UK’s leading online credit monitoring and ID fraud protection service.