Five things that can stop you getting the best deals on credit - and what to do about them
14/12/2007
You’ve done your research and put in an application, confident that you’re going to get the right deal. Then the answer comes back. It’s “No” – and you can’t think why.
The answer may lie in your credit report, which details your borrowings and your repayment track record, along with other information, such as outstanding court judgments. Lenders use this, together with data from your application, to decide whether you are likely to repay them, how much you can afford and what interest to charge.
So it pays to check your report before you even apply, to be certain that it is up to date and reflects your circumstances accurately. You can see your Experian credit report for free with a 30-day trial of CreditExpert, the UK’s leading online credit monitoring and ID fraud protection service.
You have a poor credit history
High debts, late payments, court judgments – they can result in rejections because lenders may think you might not repay a new loan. If you check your credit report before you make an application, you can be sure that all the information is up to date and accurately reflects your circumstances.
Your partner has had financial problems
Your own credit history is clean as a whistle – but you have a joint account, such as a credit card and the name of your financial associate appears on your credit report. You may not know if he or she has had any problems but a lender will check. So it makes sense to get your financial associate to check his or her credit report before you make a new application.
You've left footprints
When you apply for any kind of credit – cards, loans, mortgages and even utility or catalogue accounts – you should always specify that you only want a quotation and are not making an application. Every time you apply for credit, lenders search your credit report and leave a record, known as a footprint. Other lenders will see this and could believe that you are overstretching yourself, desperate for money – or even that a fraud is being planned. If you find this kind of error, get in touch with the relevant lenders are ask them to remove it.
You aren't registered to vote
Lenders use the electoral roll to help check that you are who you say you are and live where you say you live. They also look for stability – that you've lived at the same address for some years. If you fail to register to vote, they cannot verify your identity and may ask for additional identification, suspect a fraud, or even turn you down flat. Register now – contact your local council or go to www.aboutmyvote.co.uk and download a form.
You’ve got a low credit score
Before deciding whether to lend money, most organisations take the information in your credit report and application form, allocate each item a value and use a computer program to generate a credit score. This score indicates the risk involved in granting you credit – generally, the higher your score, the easier you will find it to get the deals you want.
Every lender uses a slightly different formula, so every application could generate a different credit score. Your credit score will also change over time, as your circumstances change, so if you improve your credit history, you can expect to see your score go up.
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