Your credit history - can you put it to rights?

Finding help is easier than you think!

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BEING rejected for credit, whether for credit cards, loans or even a mobile phone contract, can be bad news. But, it is possible to take action - firstly through checking your record to see if there are any errors, and secondly, through rebuilding your history.

The first thing to do is to obtain your credit report from a reference agency – i.e. Equifax, Experian, or Call Credit. You can do this for a small one-off fee or subscribe to have ongoing access to your records. You may also find that some offer a free trial period.

Tick off the possibilities

Being rejected for credit is not always a result of your own financial difficulty. If you have recently moved house, it could be because the previous occupiers' debts are still showing up.

If you obtain credit jointly with someone and they have credit problems, this can also reflect badly on you. So, if you spot former friends or partners on your report, apply to have their details removed. You are entitled to have incorrect information rectified or removed from your file or to have a short note put on the report which explains the background of a period of poor credit - a 'notice of correction'.

There are a number of contributing factors that can lead to a poor credit rating - for example if you have missed credit card payments, direct debits, or have a county court judgement (CCJs) entered against you. With a CCJ, if you were able to pay within one month, you should apply to the county court for a Certificate of Satisfaction which will be passed on to the credit reference agencies. Meanwhile, bankruptcy is the most serious problem to deal with.

However, your credit history could be affected by even seemingly inconsequential things - such as failing to pay a monthly phone bill on time.

Bear in mind that any defaults remain on your record for six years, so it could take some time to be allowed credit again.

Take active charge

Repairing your credit history can take some time. Small steps such as ensuring all your debts are registered to the correct name and to your current address can help. If you do already have a credit card, it can be looked on favourably if you don't regularly spend to near it’s limit. Paying all bills on time – and if possible in full – shows that you are capable of managing your debt, and therefore less of a risk to lenders.

Meanwhile, try to avoid sticking your head in the sand - if you are having problems meeting direct debit payments, see if you can change the dates of these if it will help. Or, if you are struggling, ask if smaller payments would be possible for an agreed period of time.

Then filling out an application for credit, it counts in your favour if you have a solid employment history and have been with your bank a number of years. Try to give a landline rather than a mobile number - and homeowners also tend to viewed as lower risk than tenants. It is also helpful to be on the electoral roll for your current address.
Simply continuing to apply for credit cards after an application has been refused can make matters worse, as a record of a large number of searches by prospective lenders - known as footprints - can in turn mean more rejections. Remember, if you are rejected for credit, take action - find out what the problem is and take steps to put it right.