Give Yourself Some Credit

Britons are more than £1,000bn in debt and nearly six in ten people don't know how much they owe but despite the headline grabbing figures it's not all doom and gloom.

More than 73 per cent of borrowers cleared their credit card balances each month during 2004 (1) and only 0.76 per cent of homeowners are having problems keeping up their mortgage payments (2).

However, the information a credit reference agency (CRA) provides to an organisation making a lending decision goes much further than just mortgage and credit card payment details.

MyCallcredit director Alison Nicholson says:

"So many different aspects of your life affect how a lender will view your suitability as a borrower and some of them aren't that obvious. So if you want to be sure of obtaining credit in the future you need to take control of your credit history."

To make sure your credit file is in order follow the credit savvy guide from CRA Callcredit:

  • Pay mortgage, credit cards, mobile phone and utility bills on time - even a late payment can affect your credit rating.
  • Remember anything that you pay for on direct debit or on a payment plan is likely to appear on your credit file.
  • When you decide not to use a credit card or current account don't just cut up the card - inform the lender, the facility will be registered on your credit file until you do.
  • Make sure your credit file is disassociated from the people around you to whom you have no financial connection, eg housemates or family members.
  • Check your own credit file regularly to make sure the information held is correct. Log on to www.mycallcredit.co.uk
  • When you move house contact the local authority to ensure you are added to the electoral role as soon as possible.
  • Inform any company who has provided you with a credit facility when you move address.
    If you are declined credit, ask why - you are entitled to know. If information on your credit file is inaccurate you can have it corrected.
  • If you are having financial problems inform the lender sooner rather than later - most will be sympathetic and work with you to find a solution.
  • Don't pay for advice that comes free - debt counselling is provided free by the Citizen's Advice Bureau, Consumer Credit Counselling Service and National Debtline.
  • Don't pay to have incorrect information removed from your credit file when you can do it yourself. Credit Repair Agencies claim to be able to remove county court judgements from your file for a fee - if it's possible you can do it yourself.
Editor's Notes
  1. APACS figures for 2004 show that at the end of each month 73 per cent of credit card balances were cleared in full
  2. CML research dated 31.01.05 show that a total of 0.76 per cent of mortgages were in arrears.