Discover how to put yourself in a better position before you next apply for a loan or credit card.
Your credit record can help you be approved for loans, access lower interest rates and generally put you in a more favourable financial position. So it's natural to look for ways to improve it. Here, you'll find out a few ways improve your credit file and credit score no matter what credit position you're in.
What's on my credit file?
You might be aware that your credit file holds a detailed record of your borrowing history – but what details of this history are included? This is a quick guide to what you'll find in your credit file:
- Your personal information. This includes your name, date when birth, current address and driver's licence details.
- Consumer credit information. If you have made any applications for credit in the past five years it will be included. This includes joint accounts. Your credit accounts will also be listed along with what type of account they are, the date they were opened and closed, the credit limit and the monthly repayment information.
- Default information. If you have any overdue debts or serious credit infringements listed against your name it will be on your file. Defaults remain on your file for five years, while serious credit infringements remain for seven.
- Public record information. Any credit-related information held on the public record such as bankruptcies or court judgements will be listed on your credit file.
- Commercial credit information. If you've made credit enquiries for commercial purposes or you have overdue commercial credit accounts they will be listed on your credit report.
How to improve your credit file
Order your credit file and check the details
This sounds like an obvious tip, but it's not one that's always followed through. However, ordering a copy of your credit file is free once a year and can help you check for errors and better understand your credit position. A 2013 survey from the Office of the Information Commissioner found that 30% of credit reports have errors in them, and these errors could stop you from getting approved. Check all your personal information is accurate and that there are no duplicate listings or listings that don't belong to you. If you do find an error, contact the credit reporting bureau to have the listing removed, and if they're unable to remove it you can contact the credit provider responsible for the listing directly.
Make your credit card and loan repayments on time
After the introduction of comprehensive credit reporting in March 2014, your credit card and loan repayments are noted in your credit file. It's important to make your repayments on time and make at least the minimum repayment to keep your credit file in good standing. One late payment won't necessarily mean you have bad credit, but a pattern of late payments can lead to a lower credit score and make you look like a risk to lenders.
Space our your credit enquiries
Shopping around for credit is important when it comes to getting a good deal, but when you start applying with multiple lenders in a short space of time it will negatively impact your credit reputation. If you are looking for a new credit account, make sure you space out your applications (if you are required to apply at more than one place) and make sure compare your options beforehand to limit the chances of being rejected for the loan.
Track your credit score
Some credit reporting bureaus offer credit monitoring services that allow you to track your credit score and your credit file. You'll be sent notifications when something on your credit file changes or if your credit score moves up or down. If you want to monitor your credit position, these services might be good to consider.
Be a responsible borrower
If you move house, make sure to redirect all of your mail and notify your credit providers of the move. If there are any problems with your credit account you want to be easily contactable. If you think you may forget to make repayments, set up automatic repayments from your bank account or card. However, if you lose your card, replace it or it's stolen remember to pause the repayments and restart them with the new card's number.