Improve your credit rating

There are certain facts that you should be aware of regarding credit, especially if your credit history leaves something to be desired. The first of these is one surprisingly few people are aware of. Every time you apply for credit, the lender you are applying with checks your credit history with a credit reference agency. There are two main, ones and I'll get to those later, as they can actually help you. What people are not aware of is that every time you apply, even if you are refused, it is logged with these agencies.

So the first thing you should be very wary of doing if your credit rating is poor, is attempting to get credit again, until you are sure that your history is as clean as possible.

Cleaning up your credit history is easier than you would think. The first stage is to find out just how bad the situation is. Equifax (www.equifax.co.uk) and Experian (www.experian.co.uk) are the two main credit reference agencies, and hold records of your credit history. You have a right to see what is held against you, and if you send them £2, they will post you a pack with details of everything currently held against you (visit their websites for details).

Experian
Consumer Help Service
Experian Ltd
PO Box 8000
Nottingham
NG1 5GX

and
Equifax
- can apply online
or send a cheque for £2 to them on
Credit File Advice Centre
PO Box 3001
Glasgow
G81 2DT

When the pack arrives, don't be nervous. This is an unavoidable part of cleaning up your rating, and with your record in front of you, however bad it is, you can start working to make yourself credit worthy again.

So have a look through your history. The first stage is to look at items that have been paid. Wrong or misleading information is common in credit histories, and banks and lenders have a duty to return a rating of 'Satisfactory' once a debt has been paid. Few actually do. If anything that appears on your history has been paid but not been noted, write to the original lender and request that they inform the agencies of the fact it has been paid. Stage one is complete - at least now what is against you is accurate.

Next thing - the people you live with. Your credit rating is affected by the people you live with, but does not have to be. You can ask the agencies to dis-associate you from the people you live with, and this will helop your rating if the people at the same address have had problems or currently have a bad rating.

CCJs are up next, and these are rough. Don't be under any illusions - even if you have paid off a CCJ (County Court Judgement), that will remain on your history for 6 years. However, all is not lost. If you have paid a CCJ, then you can request a Certificate of Satisfaction from the court. Sent copies of this to the major agencies, and the fact that the CCJ has been paid will be noted on your file. Your rating will still be far from perfect, but this can help a little.

You can add notes to your credit rating. You are legally entitled to add relevant information to your profile to help your rating. For example, if you have missed two payments on a loan due to injury, you have hardly committed a major crime, and if you note this on your file, lenders are more likely to consider you. There are times when people can's avoid missing credit payments, and lenders, however satanic they seem, will bear this in mind.

Make sure you are on the Electoral Register at your current address. They will find you, whatever happens, but if you are not on the electoral role, lenders view that very badly and it harms your credit rating. You are a better risk to the lenders if they know eher you live, and there is plenty of evidence that you are not the kind of person that hides from debt. Other things that can improve your rating are, frankly, silly. Or so it seems to me. Married people are rated better, and being employed rather than self-employed helps.

Finally, if you want a decent credit rating, make sure you make what payments you have on time, every time. One slip, and you won't be able to get credit for 3 months, and that slip will stay on your record much longer, harming your rating. Even being late with a payment will be noted on your file.

Credit is a strange world, and there are plenty of pitfalls. Avoid, at all costs, those companies who claim to be able to repair your rating - they can't. Companies that say they will consolidate your debts are also to be steered slear of. They will consolidate your debts, but you will be paying off one huge loan, with massive interest, for many more years to come.

Finally, don't worry about your rating. As long as you conduct yourself well, and pay the banks what you owe, when you owe it, then they will be happy, and your credit rating will reflect that. Even if you can't pay them, let them know - a phone call will normally avoid delayed payments haunting you in the future.