A clean credit history is an important thing to have if you want to apply for loans and financial services like credit cards or store credit. There is no national blacklist for poor credit, but there is a system whereby lenders can request information on your credit rating from companies like Experian and Callcredit. Understanding what this report means, and the ways in which you can maintain and improve your credit history means that you will be in a better position to apply for loans. From using online banking to setting up direct debit payments for credit cards, and applying to look at your credit file, you can better maintain your records.

1 – Understand Details

A credit history is built up by third party agencies through access to your past loan applications, your details on the electoral register, and any bankruptcy or civil court disputes that might have been tied into your lending history. This information is not illegally obtained, and is compiled through public records in order for credit agencies to advise banks and other lenders It is important to think carefully about how you might affect this history. Keep records of your past loan applications and credit card statements, and always think about how your credit rating might be affected by any major financial transaction.

2 – Use Online Banking

A good way to keep on top of your finances is to use online banking. Easy to set up, you’ll be able to monitor your incoming and outgoing accounts, and will also be able to set up savings accounts and keep track of your payees. Keeping these records will mean that you review your spending and borrowing history.

3 – Set Up a Direct Debit for Credit Cards

Credit cards can be one of the worst ways to damage your credit history. Failure to repay credit card bills on time, and additional charges, will be the kind of problems that credit agencies can use against you when applying for loans. A good approach is to set a fixed amount of credit on a card that can be used and paid back every month by a direct debit. Making stable repayments, and being careful not to exceed your credit, will reflect well on you for your credit rating.

4 – Don’t Take on Extra Loans That You Can’t Afford

Although it can be tempting to take out extra, short-term loans, always think carefully about what the consequences will be, as well as whether you can pay off fees. Payday loans are particularly problematic, in the sense that they charge very high APRs to borrowers. It’s also important to remember that many lenders will offer you a loan, even if they know that you have a bad credit history. Again, a lender can benefit even if you default on a loan by charging interest and reclaiming debts, so be careful about offers that seem too good to be true.

5 – Check Your Credit Files

You have a statutory right under the Consumer Credit Act to request copies of your credit history from agencies like Experian, Equifax and Callcredit within the UK. By viewing this information, you’ll be able to work out where you might be being damaged by incorrect details and information. You should also contact credit agencies if you have been the victim of fraud to check that a request has not been made by someone that has managed to steal your personal banking details.

Hugh Tyzack is owner and writer for UK based GBP Loans, specialists in guarantor and secured loans.

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