As a busy mom there frequently seems to be about 101 things that require your attention – and you would be forgiven for thinking that taking a free online credit check was not one of the top priorities. However, the information on your credit reports – which are held by credit reference agencies – plays a big part in the decision making process when you apply for credit. Most of us have at least a few credit cards these days, and credit checks are also used when you apply for the most important financial products, like mortgages. Creditexpert.co.uk currently offer a free online credit check which can allow you to see what lenders and other credit providers see – before you make an application.
Credit reference agencies have been around for a while, but have become increasingly important in recent years to an ever widening portion of the credit industry. Credit reference agencies allow credit providers to share information about customers. The type of information that can be shared is strictly regulated, and focuses on customer’s use of credit accounts. The majority of credit providers now use at least one credit reference agency, with which they share information, and in turn use the files held to run credit checks on people applying for their products.
By looking at your credit report, the lender can produce a credit rating for your application that takes into account the way that you have managed your debt in the last few years. Sound management of your accounts, with regular repayments made in full and on time, will obviously create a positive impression, and can contribute towards your application being approved. Unfortunately, missed and late payments are also recorded, and can understandably have a detrimental effect during the lenders decision making process.
But why do you need to see your credit report? Well, there are several important reasons to check your credit report or file at least once a year – even if you are fully aware of exactly when you have had any issues managing credit.
The first is simple, and applies to any large database: while every effort is made to prevent errors being recorded on your file, the volume of information processed by credit reference agencies is vast, and mistakes occasionally occur. Erroneous data of your credit file can easily cause an application that you make to be rejected, and so you need to check that everything on your credit report is factually correct.
Sometimes it is a simple case of old records requiring an update. If your file records you as being listed on the wrong electoral roll this can cause problems with applications. This is because your credit file is not only used to produce a credit rating for applications, it is also used to help confirm your identity and guard against fraud. For more information on what to check on your credit file, look here.
Jane Evans, a financial Journalist, has been a financial buff for decades. She has published articles in VRL Financial News and Euro Money and is a member of the Financial News Society. She lives in Rumford, Maine, with her husband, three kids and two dogs.