Don’t give in to a payday loan this Christmas
With Christmas coming soon are you tempted by a payday loan? You’ll...
This is a guest article written by Darren Beach, blog editor and all-round nice guy at Experian Experts.
One place to start dealing with debt – to prevent it and to recover from it – is to check what’s on your credit report.
The data and information held there summarises your credit history, so it can be well worth reviewing it on a regular basis, and making sure it provides an accurate and up-to-date picture of your credit history.
Keeping on top of your credit history can have a positive influence on your finances.
Even simple discrepancies on your credit report, such as different ways of listing your name and address, can make a difference. If you do find anything that isn’t accurate, contact the relevant lenders to get an amendment. Getting it right could help you to understand and improve your credit report.
A good rule of thumb is don’t be tempted to skip or delay your monthly repayments. Your credit report can show you if you’ve missed some payments on cards or loans you have, and as late or missed repayments stay on your credit report for at least six years, it’s not hard to see how important it is to stay on the right side of repayments. If you accidentally do miss one, you can explain it by adding a “notice of correction”, which is a statement of up to 200 words.
If you’ve been declined for a mortgage application, then going on and applying to every lender you can find could actually harm your chances of getting a mortgage – so avoid making several applications close together, as this can signal financial stress. Each application is recorded on your credit report, and if lenders see lots in a short period, they could think that you’re desperate or suspect a fraud.
Adverse information that remains on your credit report is likely to affect your credit rating less and less as time goes by, because lenders tend to focus on your most recent credit history.
If you’re coming out of debt, you’ll probably want to start rebuilding a good credit rating. Smaller forms of credit, like a mobile phone contract or a credit card with a low limit, can be easier to be accepted for and also show that you can pay bills responsibly and on time each month. Be careful though – they can sometimes come with higher interest rates and you shouldn’t take out something that you can’t repay. If you get a credit or store card, make sure you consider only spending a small amount and clearing the balance in full at the end of each month to avoid interest.
Lenders use your credit report, along with information on your application and information they might already have, to decide whether to offer you credit. Different lenders can score differently, using their own formulae, based on their own factors – there is no ‘magic number’.
The Experian Credit Score is an indication of how lenders may view the information in your Experian Credit Report. At first, you might find that taking out a new account might see it reduce a little, but managing it well can help improve it and build up your credit history. Small but important things like registering on the electoral roll can help too.
If you’re struggling to make ends meet, you could arrange to talk to your lenders. In some cases you may be able to arrange a repayment schedule. Free advice is also available from organisations such as StepChange Debt Charity.
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28 Jan 2015
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