Understanding your credit history

In today's current UK financial situation, it is essential to understand what's in your credit files. There are 3 credit reference agencies, which are Equifax, Experian and Call credit. These agencies keep lots of linked addresses and financial information about you.

CREDIT REPORT
From each of the credit reference agency mentioned, you can order your credit report. You could usually subscribe to free trial (which then lead to a continue subscription, unless you cancel). Or you can order a statutory report for £2 where your credit report will be send to you by post within 7 days.

Each of these reference agency store different level of information about you, these information consists of some of the following:

• Electoral Roll
  
• Linked Addresses
• Bankruptcy/Insolvency/Court Judgment
  
• Searches and Enquires to your Credit ile
  
• Details of Lender & Credit Accounts (Up to 6 years Account Status)
• Monthly Balance & Limit History
• Mortgage Repossessions
  
• Notices of Dispute/Correction

To put it simply, what's in your credit files are information about the voting register, people performing a search on your credit file and credit/lending companies. Each month your credit /lending companies who you pay bills to like mortgages, loans, credit cards, communication (mobile) and banks will provide a status update stating your payment history. So say if you have made 1 late payment on one of your credit card, it will show up in your credit report stating how many month(s) being late.

CREDIT SCORE
The banks and credit card lenders uses information found from your credit file, which generate a credit score. Lenders uses these credit scores to determine who qualifies for a loan, the interest rate, and what credit limits.

For getting a credit card or mortgage or loans, having a bad credit score from your credit history means you either won't be able to get it or the lender will give you limited products and/or higher interest rate. Therefore it is essential to check you credit history every so often (say at least once a year), especially before you getting a credit or loan facility. Also sometimes different people which may have financial links with you like family or people you live with or co-name of sharing a bill; also circumstance changes like getting married/divorced and change of address can have an effect on your credit score.

IMPROVING YOUR CREDIT FILES
From what i know there are several things which helps to improve your credit file.

• Electoral roll register - if you are eligable to vote, make sure your name (correct first and surname) is on the register to vote from your current address
• Credit companies - pay your credit companies mentioned (bills) on time by seting up direct debits. Also for credit cards setup to pay at least the minimum payment, even paying the minimum will satify the credit companies and them giving you a good monthly status.
  
• Build up your credit history - it is better to have credit cards/loans and paying them back than not have one at all, otherwise if lenders sees that you have no credit history it is more risky for them. You can simply get a credit card (i think you can also get credit building credit cards or even prepaid ones) and basically each month spend a little using them and pay it off. This way it will help you build your credit say after 6 months.

Be sure to have a good look through your credit file. If anything looks wrong in your credit file, then you will need to write to the credit reference agency and credit/loan companies to make corrections.