Interpreting Your Credit Report

It pays to stay on top of your credit, but how often do you really need to check your report? According to financial experts, you should review it at least once a year. However, checking the report every six months will make sure you're in good standing and make it easier to stop fraud as soon as it happens.

While you'll benefit from checks and subsequent monitoring, it is just as important that you understand the information on your credit report and how it affects your ability to get credit when you need it.

You haven't borrowed enough

It's easy to believe that lenders will be eager to extend credit to you if you have no debt- but it's not as simple as that. Lenders depend on your credit history of taking loans and repaying them on time in order to determine your reliability. If there's nothing on your report to demonstrate your creditworthiness, lenders might be conservative with their scoring because they cannot tell how you would behave if you're given a line of credit.

This is not a suggestion to apply for several lines of credit as a lender could use other information, such as your bank statement, to determine how much of a risk you are. When you decide to apply for a loan, you should explain your circumstances to the potential lender. For instance, you could say that you didn't use credit cards because you're able to live within your means.

You don't meet the lender's minimum requirements

It's an interesting fact that you don't have a "single" score. Every lender uses unique ways to calculate scores, and sometimes the same lender will employ different calculations for different products. They create a profile for an ideal borrower, and you might not fit into that template.

This is why it's crucial that you research the lender before you apply. What type of customers do they cater to? Some lenders cater to home owners while others design their products to attract students, seniors, or the jet setting crowd. A comparison website will help you to filter lenders and products to find the ones fit your specific needs.

Multiple recent searches on your credit report

Each application for credit you submit gives the lender permission to search your report. If you apply to multiple lenders over a short period, the searches on your credit report could give a potential lender the impression that you're taking on more credit than you can handle.

If you're shopping around for the best offer, make sure the lender understands that you want a quote as you're shopping around. In this way, they'll conduct a quote search, which will not impact your score.

You had  problems in the past

Your financial status today is far different from what it looked like in your past. If you skipped out on credit repayments, the arrears will stay on your report for up to three years. A County Court Judgment (CCJ) will stay on the report for at least six years, and a bankruptcy order will linger on your report for up to fifteen years.

Everyone makes mistakes. If you recognize the importance of cleaning up your past mistakes, you could consult with a financial expert about the steps you can take to clear your past debts. Then, you can use the advice to take control of your finances. Take note: you don't need an agency to act on your behalf because it's very likely that you could negotiate a repayment plan with the lender, without outside intervention.

You didn't register to vote

Lenders use local electoral registers to verify your address and your identity. If they do not find your name and address on the electoral register, they might need to do further checks to verify your identity and some lenders will even decline your application.
To avoid the hassle and improve your chances of getting credit, you should register to vote and update your address whenever you relocate.

Repairing Your Credit