Check Credit Report Before Applying for Credit

Adverse Credit Information Means Best Deals Will Not be Available

Nov 6, 2009

In the continuing difficult economic conditions how many people understand that multiple credit applications will have an adverse effect on their credit score?

Moneysupermarket.com, one of the UKs leading comparison sites, has called on the Treasury Select Committee to, “Improve transparency and fairness within the credit search industry in order to allow customers to shop around for unsecured lending products without it impacting their credit score.”

It’s a particular issue for those people looking for a new, or in some cases a first credit card. With so many offers now on the market it’s little wonder that consumers want to shop around for the best deal, in exactly the same way as they do for other products.

However, how many would-be credit card applicants don’t know that multiple applications will impact their credit score? According to research from Moneysupermarket.com the figure is 46%. That’s a lot of people unknowingly damaging their credit score and in the process being rejected for credit.

Refused Credit

A couple of credit card refusals may mean there is adverse information on the borrower’s credit file. The advice for consumers who have been refused credit is very clear, stop applying! They should step back from the process, get a copy of their credit report and look for the reasons for refusal.

Everyone is entitled to see a copy of their credit report which is available from one of the three main UK credit reference agencies, listed below, for a small payment.

Check Credit Report

The first and most important things to look for are inaccurate entries which can be removed by the credit agencies. Adverse information cannot be removed, despite the claims of many, less than honest debt management companies.

Best Deals go to Borrowers With a Good Credit Report

The credit report will list payments made to all creditors. They will include payments to credit card companies, banks, building societies and other finance houses. It also highlights all missed and late payments. It is this information that will help lenders make the decision on whether to lend or not. Even if they decide to lend, late or missed payments may mean higher rates of interest being charged.

So if the credit report is bad, don’t apply for the deals with the best interest rates, as almost certainly refusal will follow. Go for the products with the higher rates of interest, many of them specifically designed for borrowers with bad credit scores.

Financial journalist Martin Lewis offers this advice, check out the conditions offered by the lender, many will say, for example, that the product is only for those with a good credit record. If no information is supplied, why not contact the lender and ask them about their proposed customer profile.

Credit scores can be improved. Paying the full amount, on time every month, will mean that credit scores will get better, allowing a lower interest product to be sourced.

Credit Reference Agencies:

Sources:

Moneysupermarket.com, Greater Transparency in the Credit Search Market, 27 October 2009

The copyright of the article Check Credit Report Before Applying for Credit in Consumer Education is owned by Neil Gunn. Permission to republish Check Credit Report Before Applying for Credit in print or online must be granted by the author in writing.