CREDIT CHECKS, CREDIT SCORE AND CREDIT REPORTING SERVICES

The Credit Reporting system in the UK is somewhat different to other parts of the world, however there are also some common similarities that come into play.

In a nutshell though, companies like Experian, Credit Expert and Equifax maintain a database of records relating to your past behaviour with regards to payments and defaults on any credit cards,loans or anything else financial in nature.

In addition to this, the database contains details regarding the total amount of credit that you have and also how long you’ve lived in your current property. With all that information a “score” is generated that is used by other lenders to determine your suitability for any further financial products.

As you can imagine, any incorrect information in these reports could have a severe and detrimental long term impact on your overall score. In addition, the action of applying for credit from/through other companies will also impact your score as just having these companies “check” your credit, leaves a “footprint” on your record.

• Get on the electoral roll – In the UK this is one of the checks that is also carried out.
• Time applications correctly – make sure that you are not making requests for new credit every month as you will never lose the "footprints" on your report
• Building a good credit history/repairing past problems – try to get at least one credit card as despite what you might assume, having no credit is worse than having bad credit (at least in terms of applying for more credit).
• Keep up payments and never be late – ensure that all of your payments are made on time and at the least cover the minimum amount due. Give yourself enough of a buffer to ensure that you are not caught out by holidays as if your payment is even a day late it will impact your score.
• Marriage doesn’t hurt, joint finances do – from a financial perspective it makes sense to keep your accounts seperate
• Get a ‘quotation search’ not a ‘credit search’ – in other countries obtaining a mortgage and doing a search for the best rate through various banks will not impact your overall score, however in the UK this is not the case so ensure that you are not making too many searches.
• Evidence of stability is good – pretty self explanatory
• Check the address on all active accounts – pretty self explanatory
• Dealing with defaults on your file – if there are any, make sure that you address these as quickly as you can
• Cancel unused credit cards, debts and accounts - as debts are dealt with, ensure that the amount of available credit is applicable to our needs and not excessive. This is a simple and easy way to ensure that you don’t get into trouble.
• Use any savings to pay off debts – already done

I've mentioned your Credit Score several times throughout this hub - if you do not have an account with one of the major providers it is worth the investment to get a copy of your report. Most of the companies actually offer one month free in fact so if you have not checked it yet, now is the time to do so!