When you apply to take out a loan, credit card or another product the company you are borrowing from will check your credit file, within which all the details of your credit history and other information are stored. Much of what changes your credit score is down to how you manage your finances and whether you can prove you are not a risk to potential lenders, but there are other factors taken into consideration, that might cause problems for you, even if you’ve never been in financial trouble.
You therefore need to make sure you have been through every part of your file before applying for loans to ensure you get the best rate possible and have the highest chance of success.
Risk vs profits
This is probably the most frustrating credit issue to have as it means you are managing your credit perfectly. So perfectly in fact, that whilst you are not a risk to any creditor, you will also not make them any money, so you might be denied a loan or a card based on this. If you are the type of person that pays their bill off in full each month, or regularly transfers balances to make the most of 0% offers, finance companies know that they are unlikely to see any profit from lending to you. If you struggle to get credit then a credit broker like Itan could be a solution, and they may even be able to tell you the reasons behind your difficulties.
The only other people that will appear on your credit file are those you have a financial connection with. Those who share your address, your partner, or business partner will have no bearing on your rating, unless you have a financial connection such as a joint account. Those you have had these connections with in the past will remain on your file until accounts are closed and you take the appropriate steps to have them removed. Be careful who you share finance with; as their mistakes will reflect on you even if you have a squeaky clean history.
This one is partially your fault but not always knowingly so. Your credit report contains address, account and other personal details dating back at least six years. Some of these accounts you might have forgotten existed or you had thought you’d closed years ago. The onus is on you to check that everything in the record is correct. This means checking old unused accounts are closed properly, address details have been updated correctly on everything, your electoral roll registration is right and there is nothing that you do not recognise.
Most credit issues are repairable, whether you are to blame or not. It doesn’t matter whether you are the perfect borrower or not at some point you may come up against difficulties with your credit through no fault of your own. It is important to check everything and make efforts to correct any problems before you apply for credit as the decision is only based on your score at the point of application.
Bill Turner is a successful guest blogger. He enjoys doing marathons and has ventured in triathlons this year.