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Is your credit report something you pay attention to?
I must admit, at one point in time, it wasn’t at all for me.
It existed but there were far more important and urgent things to focus on.
Or so I thought.
For everyone who has interactions with money, there is a financial record kept by credit reference agencies.
Experian is one of them.
These agencies are contacted by lenders whenever they want to learn more about our ability to manage money.
Whether we like it or not, that financial selfie exists and it’s important that it reflects a good picture of us.
Below are some important reasons why having a good credit score and report matters:
1. Getting a mortgage
Most of us buy a house at one stage of our lives or another.
When we got married and set off to buy a house back in 2012, we faced a bit of a challenge.
Although Mary was good with managing money generally, she had never borrowed and didn’t have a credit card or overdraft.
You’d think she would have had an amazing credit score, but it was quite the opposite and required work to get that score up.
I hadn’t checked my credit report free credit score for at least 18 months and had a shock when I did.
There were incorrect entries in my report that had a negative effect on my credit score.
For example, someone had fraudulently applied for a small phone contract on my name and got away with it without my knowledge.
In addition, there was an incorrect County Court Judgement listed on my name and when I challenged it, it turned out to be someone else with a different date of birth.
At this point, a great deal of effort had gone in with phone calls and writing letters to sort these issues out.
2. Short term borrowings
Have you ever tried applying for a store card and got declined?
It’s super embarrassing!
Whether it’s a store card, credit card, overdraft or even car loan, you need a good credit score to be accepted.
How I Used Experian To Improve My Credit Score
I told you about the issues we faced before we got our home mortgage in 2012.
Those issues arose due to a combination of:
- Ignorance – Not being active about monitoring our credit score and record online.
- Errors – Although out of our control, errors existed, which were compounded the ignorance above.
We only bothered to check these things when it seemed urgent to do so and by then it was too late.
Below are the steps we took to improve our credit scores before a mortgage application:
1. Get Your Free Credit Score Today
You might not remember this, but getting your credit score was not free before.
It only got revealed to you when you paid for a detailed credit report.
The fact that you and I can now get our credit scores for free is fantastic news and should mean that we are more financially aware.
Getting this credit and report was the very first step we took those years ago.
Thanks to GDPR you can now get your Statutory Report for free! This used to cost £2.
Although getting this report once is a good idea in order to know what your financial life looks like, note that it is only a snapshot.
So having a regular review of your credit report and score is a good idea. I highly recommend doing this at least once a year.
Diarise it so that you never miss it.
I’d also recommend checking it across the other credit reference agencies as they often hold different bits of information about you.
Experian is very popular with most lenders, so you want to make sure the record with them is accurate.
2. Set Up An Alert Service
Given I had experienced an incident of fraud, I got paranoid about it happening again.
One thing I decided to do was set up an alert service with Experian.
This was fantastic because whenever anyone did a credit check on my name I would know about it immediately by text.
3. Set Up A Secret Password
This is more a preventative measure to stop unauthorised access to your credit report.
Doing this means that for anyone you authorise (e.g. a bank) to do a credit check on you, they’d have to call you for the secret password.
This gave me a lot more control and meant that I wasn’t worried about ID theft quite as much as I was before.
This helped to prevent issues of fraud I had faced before and therefore reduced the chances of a bad credit score (especially one out of my control).
4. Detailed Credit Report Review
Getting your free credit score is one thing, reviewing and acting on the items on your credit report is quite another.
This is really where the work begins.
If you have a poor credit score, the chances are there will be things on your report that you didn’t expect to see.
- Not having your name on the voters' registers
- Being registered to vote at your former home address
- Having your credit report still in your maiden name
- Spotting the negative impact of that small bill your ignored paying
- A County Court Judgement (CCJ) – (possibly not even for you)
- Late payments for something you didn’t know you signed up to e.g. device insurance
- Incorrect last name or date of birth etc
Each of these issues requires time out during your work hours or weekend to sort them out.
You’ll make phone calls, write letters etc. We did all of these.
Most of them will require you to carry the burden of proof and provide information that justifies your innocence if something wasn’t your fault.
Getting to the point of acting first requires a line by line review of your detailed report, which itself requires a commitment of time.
5. Register On The Electoral Register
Without my Experian report review, I would not have known that I was still registered at my former address.
This too had an adverse effect on my credit score and was a quick and easy win once corrected.
The correction then takes a few weeks to feed through your credit report and bump the credit score.
6. Pay Bills On Time and Debts Down
Bills differ in terms of whether they’ll affect your credit score or not.
You should automate and make all bill payments on time, however, I’d be especially careful about:
- Mortgage payments
- Short terms loans
- Car loans etc.
Basically, any debt that has a fixed date that you’re meant to pay it off each month.
Meeting this payment date each month without fail demonstrates you’re a good steward of money and therefore can be trusted with borrowings.
The same goes with credit cards. Almost everyone I know has one and some people get them as a way to improve their credit scores.
Getting the credit card and putting it into your wallet is not enough.
You need to use it and pay it off on time.
The goal here is that you can demonstrate the ability to borrow money and pay it back time and again.
Growth in financial intelligence is an active process.
Understanding and monitoring your credit score and report is a step forward in gaining confidence to do your money life well.
Take the time out to stay on top of things and you’ll find that this money journey gets easier over time.
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Have you had issues with your credit score? What was the cause? If sorted, what did you do to increase your score?
Do please share this post if you found it useful, and remember, in all things be thankful and Seek Joy.