Corrections for good credit
Ensuring the entries on your report are right and up to date will boost loan chances
QI’VE just had a look at my credit report from a credit reference agency and I’m not sure that all of the information on it is accurate. I’m worried that might have an impact on any loan application I make. What can I do to correct any errors and what can I do going forward to make sure that I have as good a chance as I can of being accepted for any loan that I apply for?
Kevin Strachan
ASOMETIMES it’s not a simple case of an application being accepted or declined. The lender may accept your application but at a higher rate than it would otherwise charge you if your credit report was better, or didn’t contain as much adverse information. So it does make sense to take the time to make sure that the information held by the credit reference agency is accurate – that way you’ll give yourself the best change of being accepted for a loan on the best possible terms. It is possible that there are entries on your credit report that are just factually incorrect. If that is the case then you have the opportunity to challenge any information on your report and the credit agency then has 28 days in which to remove that information or tell you why they disagree with you. While that process is being carried out, the disputed entry shouldn’t be used by potential lenders when assessing your risk for credit. You may find it easier to speak directly to the lender that has added the incorrect information.
You can also add a note of correction to deal with information that was correct at the time of writing but is not now because of a change in circumstances, for example if you got into debt because you were made redundant but you are now working.
It’s also worth pointing out that the worst thing you can do if your application for credit is rejected is to make multiple applications. Don’t make any other applications until you have investigated the reason for your refusal.
It may be that all the information on your credit report is correct and some of that information will stop you from being accepted for a mortgage or other loan, so here are some tips that you can use to make sure your credit rating is as good as it can be.
● Get on the Electoral Roll. Lenders like to see applicants with a bit of stability and they think that is helped if you are on the Electoral Roll at your current address.
● Make payments on time. One of the biggest factors affecting your credit report is your ability to make payments on existing loans and credit agreements (and this could include utility bills and mobile phone bills) on time. Missed and late payments will have a negative impact on your report so keep these to a minimum, or better still avoid them completely. It can help to make as many regular payments as possible by direct debit – that way you know that at least the minimum payments due will be made on time and you will never show as in arrears.
● Disassociate yourself from ex-partners. If you have split from a partner with whom you were involved financially then let the credit reference agency know that you are no longer involved so that their financial arrangements won’t affect your credit report. This also applies to people that you once shared a flat or house with.
● Cancel unused cards. If you have credit cards or store cards that you don’t use – perhaps because you only took them out for a specific purchase or because of a specific offer – then cancel them. Lenders don’t like to see prospective borrowers with too many existing sources of credit.
● Use credit to help you get credit. Sometimes the problem with being accepted for a mortgage is not that you have a bad credit history, rather that you have no credit history because you have never applied for credit before.
There are some bank accounts and credit cards that specialise in helping people build a credit history.
The credit cards charge a slightly higher than average rate of interest, but if you pay the balance off in full every month then you should be able to avoid most interest charges and start to build up a positive history at the same time.