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Your credit score affects many of the financial aspects of your life, including applications for payday loans, mortgages, and even for rented housing. Therefore it is important for you to have the best credit score you can. However, sometimes there are factors that can negatively affect your score. Luckily, some of these factors can be easily rectified to put you in the best financial position!
Not sure what’s actually in a credit file? Learn more here!
Credit score reports typically contain a lot of information, including your name, address, current employment, credit history and more. You can easily check your credit score and credit file for free on Experian, so if you’re thinking of applying for credit in the near future, you should check your credit file first to make sure there are no errors present.
Any mistakes in your credit application or mistakes in your credit file can have a seriously negative effect on your credit score. Credit companies are much more likely to reject an application that has present mistakes.
There are several common mistakes made on credit files that should be fixed as soon as possible:
Your National Insurance Number is linked to your identity from the moment you’re eligible to start working. Numbers are often quite similar, which means that a mistype could mean that your employment history comes up as someone else’s. You may be in a full-time job, but someone with a similar NI Number could be unemployed.
If you’ve had loans or credit cards in the past, you will have had to make consistence repayments. These repayments appear in your credit file so that when you apply for credit again, the financial lender can see that you are a responsible person who makes their repayments on time. In regard to this section, in particular, we’d like to offer some advice: If you’re applying for new credit, ensure that the new lender reports your repayment history to help you build your credit.
We briefly mentioned this above, but an incorrect address can lead to credit accounts being merged or a lender finding the wrong account for you. Some financial lenders base their rates on where you live, which means an incorrect address could make your credit rates quite high.
Like having an incorrect address, an incorrect name can also cause confusion, and your credit file may pick up the history of a person who has a similar name.
To fix these errors, you need to dispute your credit file. You can do this by contacting the company that you receive your credit report from. Only that company will be able to fix the mistake in your credit file, but they may need to contact your previous lenders or see proof from you that the details are wrong. For instance, if your address is incorrect, you’ll need to provide proof of address. We’ve listed the steps you can take below:
Knowledge is power, so ordering a copy of your credit file is the first step. The big credit reference agencies such as Experian have a duty by law to provide you with your credit record, and it only costs a few pounds.
Fraud and mistakes are some of the most common errors on a credit report, so examining your file for evidence of misinformation is essential. Even small mistakes can have a big impact, so check your report very carefully. If you do find any errors, the credit reference agency has a duty to correct them within 28 days. You are also allowed to add a note to your file explaining any defaults, known as a ‘notice of correction.’ However, be aware that a notice of correction can sometimes delay any credit applications you make, because the lender has a duty to read them carefully.
Yes, it might be difficult, but lenders are looking for evidence of a reliable stream of regular payments. Utility bills, council tax payments, credit card repayments, store cards, and even mortgage or rent payments can be recorded. If you end up in court for non-payment of bills, a CCJ will have a serious effect on your credit rating, and make applying for any type of credit in the future virtually impossible.
Registering your name on the electoral roll provides proof you genuinely exist and live at your address. This makes a big difference to your credit score.
Taking out a bad credit loan will help you rebuild your score if you repay the debt, but be wary of falling into further debt by making sure you can afford it. Credit rebuilding credit cards or guarantor loans are one answer, but guarantor loans are a serious risk and commitment for the guarantor, and the temptation to spend on a new credit card is also a risk. Peer to peer lenders often take a more compassionate and human approach to assessing creditworthiness, as well as offering a decent APR. So they can also be an option. As with any type of loan though, it’s vital to always make the repayments on time to rebuild your score, and avoid accruing further debt.
By rectifying these mistakes, you should see your credit score improve. Having a good credit score can increase the likelihood of securing loans in the future. But, if you’re still working on your credit score there are lenders who can also help secure a loan for poor credit borrowers.