Everyone has a legal right to check a credit report and since the new GDPR law came into effect in 2018, it is free to do so. The three credit reference agencies in the U.K are Experian, Equifax and TransUnion.
A credit report contains your personal details, information on financial links to other people, whether you are on the electoral roll, credit accounts, missed payments or defaults, and a list of recent searches of the credit report.
Unless you have access to this information, you will not know how to go about keeping your credit score healthy. If you have a low credit rating, here are five tips to improve it.
1. Don’t make late payments or miss payments
Paying your bills on time is one of the best ways to show creditors that you are able to manage your finances. Missed or late payments will stay on your credit file for up to six years.
A late payment may be due to circumstances beyond your control and if so, making the payment as soon as possible and talking to the credit provider can help to prevent it from affecting your credit score.
If you want to take out a loan to keep up with payments, submitting an application to Cobra Payday Loans leaves no footprint on your credit record. It submits the application to various FCA authorized lenders.
2. Check for mistakes on your file
Make sure you check all the details on your credit file and report any incorrect information immediately to the credit reference agency. It has 28 days to remove the information or inform you why it will not do so.
During this time, lenders are not allowed to rely on the “mistake” when assessing your credit rating because it is marked as “disputed”. It is also a good idea to speak to the credit provider responsible for the mistake.
3. Keep credit utilization low
Credit utilization is how much of the credit available to you is used. Using less of your available credit is seen in a positive light by lenders and helps to increase your credit score. If you have a credit limit of £3,000 and you use £1,500, this is 50% of your credit. Keeping credit utilization at 25% or less of your available credit limit is best.
Applying for credit often in a short space of time may make lenders regard you as a higher risk. Whatever form of credit you apply for, each application records a hard search on your report that lenders are able to see.
4. Check if you are linked to another person
If a spouse or family member’s credit rating is linked to yours, this can affect your credit score. If the person has a poor rating, it will make yours lower. If you have taken out a joint bank account or joint mortgage in the past, you are linked financially to the person.
You need to inform credit reference agencies if the situation no longer applies, such as in cases where you are divorced and no longer have a joint account. If not, whatever the other person does financially can still have an impact on your score.
5. Keep an eye out for fraudulent activity
Sometimes fraudulent activity can affect your credit rating. Keep an eye out for signs of fraud, such as applications for credit you did not make or a surge in the amount you owe. If you are a victim of fraud, you need to address it as it will damage your credit score. Approach the lenders to fix the damage.