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10 ways to clean up your credit history
By Experian
The way you've handled credit - such as cards, loans and mortgages - in the past can have a real impact on your chances of borrowing what you need in the future. These simple tips should help to improve your credit rating.
1. Understand
your credit report
Your credit report is the core of your financial CV. It lists the credit you have and your repayment history, alongside information such as any court judgments against you and whether you've been bankrupt. Lenders check it when deciding whether to make you an offer, so you need to know what's there and how it affects you before you can make any improvements.
2. Tidy up the details
Is everything in your report up to date? Does it accurately reflect your circumstances? If you disagree with anything, contact the relevant lender, explain the problem and ask them to remove or amend the entry.
3. Protect your ID
If you notice something strange, such as a loan application you didn't make, you could be a victim of ID fraud and a criminal could be using your name to take out credit. Get in touch with the lender at once and tell them about it. You can also contact Experian, the credit reference agency, which offers a free service to help victims of fraud.
4. Register to vote
And that means at your current address. Lenders use the electoral register to check that you are who you say you are and live where you claim to live, as a protection against potential fraud. If you aren't registered or are still at a previous address, they may ask for proof of your identity and address, or even turn your application down.
5. Assert your independence
Your credit report has a section listing your financial associates - people with whom you share a joint account, such as a mortgage or credit card. When you apply for credit, lenders may also check these people's credit reports, in case their financial situation makes it difficult for you to repay what you owe. So if you are separated or divorced, you should also separate your finances, tell your lenders and let Experian know. Credit reference agencies will share the information.
6. Don't leave footprints
When you are researching a new card, loan or mortgage, make sure that any lenders you approach understand you want information and aren't making an application just yet. Every application means they will search your credit report, which leaves a record, known as a footprint. If other lenders see lots of these, they may think you are desperate for money or that a fraud is being planned.
7. Cut back on borrowing
Lenders like to see people who have comfortably managed their repayments over time and aren't struggling to keep up with multiple debts. For example, if you have a lot of credit cards, see if you can pay off a few entirely. Ideally, set a budget and cut back on spending. Failing that, you could take out a single, less expensive loan.
8. Don't get behind
Always make your repayments on time. Never take out more credit to pay interest on existing borrowings - instead, let the lenders know you've got problems and they will help you to work out a schedule of payments you can afford.
9. Tell the truth
Don't lie or blur the truth on an application form - it amounts to fraud and could leave a black mark on your credit report when lenders uncover inaccuracies. That will cause you difficulties in the future.
10. Keep on checking your credit report
Your credit report changes all the time, so it's important to check it regularly to be certain that it remains up to date and that nobody is running up debt in your name. Understanding and managing your credit history could help you to get the credit deals you really want in 2007.
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