Improve Credit Rating

Ways to improve your Credit Rating - your credit rating is important for many reasons. It is assessed and used by many types of organisations including; mortgage lenders, banks, building societies, loan providers, employers, credit card companies, utility companies and mobile phone providers to name but a few.

So how good is your credit rating? Do you have any idea?. Problems and errors with your credit rating can often go unknown (and uncorrected) by individuals for many years.

In the past your credit rating was used by organisations as a means of making one fundamental decision; do they grant you the loan/credit or not. These days, with ever increasingly sophistication and frequency, your credit rating is used to not only make that fundamental lending decision but also to decide what interest rate and fees you are charged.

The first sign of a problem credit rating problem used to be a rejection of a loan application or credit terms. Nowadays it isn't so cut and dry. Attracted by potentially higher margins and rewards, in the last 10 years the mortgage, loan and credit industry has diversified and segmented into a number of sectors; Prime, Near Prime and Sub Prime. In broad terms, these categories mean pricing differentiation not rejection of your credit or loan application. So in the good old days, a bad credit rating (or an incorrect credit rating) was brought to the consumer's attention quite quickly, these days you may not even know that your credit rating is defective because you mortgage, loan or credit application automatically switches from say 'Prime' to Sub-Prime and is still approved. However, what this does mean is that you could be paying thousands of pounds more than you could be and you're completely oblivious to the problem.

At Creditsp we have compiled some practical steps to improving your Credit Rating.

1. Check your credit rating and check it now!

First and foremost you should check your existing credit rating. You need to know where you are starting from. That way you can make a series of simple actions to improve your credit rating quickly and relatively easily. Experian is the UK's largest credit reference agency and they offer the facility to check your Credit Report online via their consumer brand Credit Expert. They provide consumers with a free online Credit Report service so that you can check your credit rating quickly and easily.

Once you have obtained your Credit Report, if you find there is something registered on it that you do not understand or that you believe to be incorrect, Experian offer a telephone support service so you can speak with someone and gain expert advice and information about your Credit Report and ways to improve your credit rating or correct any errors.

2. Register on the Electoral Roll

This is a fundamental requirement to improving your credit rating. Lenders use the electoral roll register to confirm you are who you say you are and to check that you live where you say you live.

If you have lived at your current address for less than 3 years, lenders will often want to see that you have been registered on the electoral at your previous address(es) too.

The Electoral Roll typically provides lenders with the date you first registered and the date you came off the Electoral Roll at a particular address. Lenders look at these dates to identify any gaps and inconsistencies between present and previous addresses. They are basically verifying your address history to ensure that you have disclosed all the address you have lived at within a given time (e.g. 3 years) and to ensure that there are no other addresses your have failed to disclose on your loan or credit application.

In short, if you haven't already done so you should register on the Electoral Roll immediately. It is now possible to register online by visiting the Electoral Commission's website www.aboutmyvote.co.uk. Alternatively, your should contact your local authority.

3. Clean up your Footprints

Every time someone accesses your credit report they leave a trace that they have searched your Credit Report and that you have applied for a loan or some form of credit. This search is known as a Credit Footprint. If your Credit Report contains lots of these Footprints then your credit rating can be adversely affected as lenders either suspect fraud or that you are accumulating lots of new loans and credit accounts and thereby potentially over-burdening yourself with debt.

You should access your Credit Report to see who has left a recent Footprint and ask Experian to remove any duplicate Credit Footprints. There are two kinds of Footprints a 'soft footprint' and a 'hard footprint'. A soft footprint will not affect you credit rating whereas a hard footprint can. Soft footprints should be done by lenders for quotations but they often just leave hard footprints instead. So make sure lenders have registered the correct type of footprint.

In future, if you are shopping around for mortgage, loan or credit quotes ask lender to perform a soft footprint.

4. Credit Relationships

Your Credit Report may also contain details of people (e.g. spouses, relatives etc ) whom you have held a joint credit accounts with. These may include joint banks accounts, mortgages, loans and credit cards etc. In such circumstances the conduct of these accounts will affect your credit rating jointly. Therefore, another persons actions may have a bad credit rating affect on yours.

If you now are financial independent from this other person or no longer share joint financial arrangements then you should obtain your Credit Report and then contact Experian and they can look to disassociate you from the other person - Make sure your credit rating isn't being adversely affected by someone else.

5. There's good reason for it!

If you know you have a bad credit rating and it is as a result of a temporary change in your personal circumstances e.g. you where made redundant or were ill, then Experian may be able to help. Notes can be added to your Credit Report to explain such occurrences and lenders may take such notes into consideration when assessing your credit rating.

6. Pay on time.

This might sound pretty straight-forward and it is - pay your mortgage, loan, credit cards and any other credit commitments (e.g. mobile phones, utility bills etc) on time. Use direct debits where possible to ensure your commitments are paid on time.

If you have lots of credit arrangements it may help your credit rating to pay some off altogether.

7. Keep away from so-called Credit Repair companies.

Do not be duped into paying expensive fees to Credit Repair companies. They do not have the authority to change anything on your Credit Report, no matter what they claim.

8. Keep monitoring your Credit Report.

Experian offer a 30 day free trial of their Credit Report monitoring service via their consumer brand Credit Expert. This is a proactive service which sends you an email and a text message to your mobile phone every time something significant changes on your Credit Report. This service can help you keep a breast of exactly who is accessing your Credit Report it can help you monitor your credit rating and protect can be a means of protecting yourself against ID fraud.