Whatever your personal reasons for wanting to open up new credit accounts, it can be a demotivating and even humiliating experience to be refused credit by potential lenders. It can be even more upsetting when your credit rating, compiled by the commingling of information from your application and your credit report, is a poor one that affects your ability to move homes or jobs.
A sorry looking credit rating can also influence the rates that lenders might consequently charge you. Remember that if you represent a high risk to them due to the information they reap from your credit rating, they might still decide to take a chance on lending to you, but with extortionate rates thrown in to the bargain. The identical philosophy applies to mortgage lenders.
Furthermore, Landlords of rented accommodation naturally take credit ratings extremely seriously. They operate in an area of complex legislation and it is imperative to them to avoid putting themselves in the tenuous positions of suffering financially yet powerlessly due to Tenants’ rights. It hardly takes a genius to figure out if they are likely to offer their accommodation to applicants with favourable credit ratings or those with questionable ones.
Credit Repair Guide
Whilst the outlook might appear bleak, all is not lost. You can take various common sense measures to help fix and rejuvenate your broken and ailing credit rating, that concurrently enables you to offset any early warning signs of identity fraud and theft. It is not a complicated process requiring hours of administrative tedium or the eating of humble pie over the telephone to your lenders.
It simply starts off with your credit report and, forearmed with a few hints and tips, you will soon discover how the rest pretty much flows from there onwards:-
Credit Report Checking
After you have opted to access your credit report, use it rather than lose it! Do bear in mind that your credit report is to your potential lenders what your past employer references are to future potential employers. Whilst you might never have the opportunity to view an employment reference and redress any grievances you have regarding its contents, no such barriers exist with your credit report.
Your credit report is referenced not only by credit card, loan and mortgage lenders, but also by mobile phone companies and utilities providers. This gives you an idea of the gravitas it carries. Also of the importance of ensuring that it remains in as good a shape as possible.
You might think that you can have no influence over it, but you can. Just like with any sort of automated financial report, mistakes can and sometimes do occur. Misrepresented inaccuracies causing damage to your credit report and score can only be rectified when they are identified and actioned.
Once you have got in to the swing of checking your credit report on a weekly or monthly basis, it will simply become part of your routine. You will wonder why it has taken you so long to use it to help pinpoint areas for improvement.
Dormant Account Closures
Although you might have paid off past credit to particular lenders in full, they will continue to feature in your credit report until you close such dormant accounts down. In order to avoid any unnecessary confusion, get rid of them by contacting the lenders to terminate the accounts.
They are of no further use to either you or them and any paperwork you have or receive through the post appertaining to them simply creates unwanted identity fraud and theft risks. With fewer credit report entries, your potential lenders are likely to have a clearer snapshot at a glance of what your borrowing limit might be, coupled with what you already owe.
Electoral Roll Registration
If it is not officially recorded that you live at your address, then it is highly unlikely that any organisation will be inclined to offer you credit. Credit reference agencies are provided with their address details by the Electoral Roll and they, in turn, pass your information on to your potential lenders upon request. All you need to do if you are not currently registered to vote is contact your Local Council to right this wrong.
Identity Fraud And Theft
Your credit report truly serves a dual purpose in relation to this unsettling topic. First off, of course, it allows you to identify any new accounts that were not opened by you, any declined applications that were not originated by you and any increases to amounts owing that were not caused by your spending.
Secondly, each of the above factors can impede your credit report and score. Hence, your ability to identify and act promptly serves two interrelated purposes in a single swoop.
A history of late and missed payments does not bode well for you or for your potential lenders, to whom you are appealing to offer you credit based on an inconsistent track record. Whilst your late and missed payments are included in your credit report and remain there for a three year duration, your potential lenders are unlikely to penalise you for what appear to be uncharacteristic oversights.
If you underwent a period of non payment for a particular reason, such as a bereavement, the breakdown of a relationship or an accident or illness, you can request that an explanatory footnote is added to your credit report. This can help to instil confidence in your potential lenders.
You cannot change the past, but you can change the present and the future by ensuring that you make correct and timely payments. Looking at your credit report provides you with any further motivation you might need to do so, as you are able to see first hand how your shortcomings in this area reflect shabbily on your financial status.