Why Does My Credit History Matter?
You may have heard different terms being bandied about like ‘credit report’, ‘credit history’ or ‘credit rating’. These can all be a bit confusing if you’re looking to borrow for the first time or if you’ve been turned down for something like a mobile phone contract or similar, due to your ‘credit score’. The likelihood is that you probably haven’t thought much about your credit report and what it means to you until it prevents you from doing something.
What is a credit history?
A credit history is a record of your past financial behaviour when it comes to borrowing. Although you may not have taken out a loan or credit card, you’ll still have information held against your name which demonstrates whether you pay your bills on time, and in some cases even whether you’re behind on your rent. Your full name, address and whether you’re registered on the electoral roll for that address can be seen, as well as details for any joint finances you may hold with another person. Basically, it’s a snapshot of you as a consumer. The more stable you appear and the more debts you’ve had and paid back in full, the better you will come across to lenders and others who want to see your file. All information is held for a maximum of 6 years.
Why do people want to see it?
Lenders, letting agents, mortgage providers and utility companies may want to see your file to check that you fit in with their idea of a good customer. Some lenders will not give credit to those who have a poor record of paying back past credit, as this puts them at risk of loss. Similarly, if you owe money to a utility supplier due to unpaid bills, a new one may not take you onto their books until you’ve cleared the excess.
How can I find out what mine says?
You can view your own credit file online or via post. Information about you will be held by the three main credit rating agencies in the UK; Experian, Callcredit and Equifax. They will each have much the same information about you but they may score you slightly differently depending on how they interpret the details they have. You may be asked to pay a small fee to view your file, or alternatively you can view it for free using Noddle which is an offshoot of Callcredit.
How can I improve my rating?
The only way to improve how lenders see you is to show stability and responsibility towards borrowing money. Making sure that all your details are correct, getting on the electoral roll and getting rid of unused credit cards is a good first step. Borrowing small amounts and paying them back in full and on time should help to build your score over time as well.
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