If you have never checked your credit score before (and apparently 47% of us haven’t) it may surprise you to realise the amount of data these agencies hold on us.  In a world where data is power, these agencies are controlling our access to all sorts of financial products so whether you are taking out a new mobile phone contract or trying to get a mortgage at some point your lender will refer to one or all of these agencies .

You should aim to check your credit score annually and especially before applying for new credit.  This will allow you take action to improve your score and spot any mistakes or fraudulent applications made under your name.  A good score lets lenders know you are a responsible borrower.

If you don’t have a good credit score don’t panic as there are things you can do to improve your position.

  1. Register to vote. You will find it difficult to access credit if you are not on the electoral role.  Further information on how to register can be found at gov.uk/registertovote
  2. Get a credit record. If you have never had credit before then the agencies have nothing to score you on and this can result in a low score.  Taking out a credit card or small loan and making the payments will help build your score.
  3. Be a responsible borrower. Lenders always want responsible borrowers and things like paying by direct debit will help as you will not inadvertently forget to make a payment.  If you are borrowing on a credit card aim to keep your balance under 50% of the approved borrowing limit.
  4. End financial links. If you no longer connected with someone you previously shared financial links with then you can ask the credit agencies to add a ‘note of disassociation’ to your record.  Your ex-partner’s financial behaviour will not affect your future applications.
  5. Use an eligibility calculator. Each time you apply for credit this is recorded on your file and making multiple applications may detrimentally affect your score.  Using an eligibility calculator lets you see how likely you are to be accepted before you apply and will not affect your credit score.

Knowing your score is only the first stage.  Understanding what is influencing your score (up or down) is the next stage.  For example, using up to or over 90% of your available credit card limit or missing a repayment will lower your score whereas registering to vote or ending an old financial relationship will boost it.

Credit agencies don’t always get it right to get your record corrected.  If you have been refused credit you can ask why but you need to ask the correct person.  Experian, one of the 3 credit checking agencies, has a credit refusal tool to help you understand why you might have been refused and what action you can take.

We have very little control over the information gathered by the credit checking agencies and we cannot opt out of the system but what we can do, to the best of our ability, is make sure the information they hold is accurate.