What to look out for on your credit history

Your credit history may affect your ability to get credit. Is your credit file as healthy as it can be? We explore some things you need to look out for.

Are you registered to vote?

Being on the electoral roll is a simple way to improve your credit score. It acts as proof of your identity and address for lenders. You can register quickly and easily at gov.uk. Remember to update your address if you move home.

Is someone else’s bad credit history affecting yours?

Joint credit agreements with someone else can affect your credit score. This is true whether the agreements are still active or not. Say you had a joint loan with an ex-partner or flat mate. When lenders look at your credit history, they’ll take the other person’s credit history into account. If they have a poor credit history, it could lower your credit score so it’s important that you disassociate yourself from them.

You can ask for a notice of disassociation by writing to all three of the credit reference agencies. These are:

• Equifax
• Experian
• Transunion.

The agreements will need to have ended or be transferred to an individual name before this can happen.

Are all your accounts registered at your current address?

When you move to a new house, it’s important to check that all your existing credit agreements are updated with your new address. When searching your credit history, lenders finding a discrepancy in addresses could question your identification which may negatively impact your chances of getting credit. Check your credit history with each agency to make sure there are no old addresses listed.

Know the difference between a soft search and a hard search

When you apply for credit the lending company will search your credit history. If they perform a hard search, then this will show up when any other companies check as well. Too many of these hard searches could be viewed as a bad sign and may affect your ability to get credit. Soft searches can’t be seen by lenders searching your file, only you can see them. Eligibility checkers usually use soft searches. You can ask a prospective lender to carry out a soft search, although not all of them will do so. You can check your Equifax report for free with our member-only platform CredAbility.

Do you have a payday loan?

Some lenders will not consider you for credit if you have a payday loan because they could view these as a sign of previous financial troubles. If you have a payday loan that you think may have been mis-sold, you might be able to have it removed from your credit file.

Unused credit can be bad

Having access to a lot of credit that you don’t use may count against you. If you have lots of unused credit cards or store cards then look at closing a few. Keep the ones that show a good payment history and close the ones you do not use. It is recommended that you keep your used credit to between 20% and 30% of the total credit available to you.

Maxed out credit can be bad too

If you have used the majority of your available credit, then this may adversely affect your credit score. Lenders may see this a sign that you are not managing your debts well. If you want to apply for a new card, a loan, or a mortgage then you should look at reducing your existing credit first.

Check for mistakes on your credit file

It isn’t unheard of for mistakes to end up on your credit file. Mistakes could be due to simple clerical errors or misinformation supplied by a lender. If you come across something you think shouldn’t be there you can take action. Contact the lender first and ask them to put it right. If this doesn’t work you could make a notice of correction on your credit file and/or contact the Financial Ombudsman.

Look out for fraud

If you notice any accounts on your credit file that you do not remember opening, or any other suspicious signs, then this may be a sign of fraudulent activity. Should this be the case then contact the lender straight away.

Keep an eye on your credit history

Your credit score can go up and down. Checking your credit file occasionally will help to ensure it is correct and up to date. Looking at it before you apply for credit can show you if there is anything that may adversely affect your application.

The credit score “number” that you’re assigned by each credit reference agency, is rarely the same for all of them. This is because they all use different methods of assessing your credit score. It's more important to focus on the accuracy of the entries. It’s free to check your credit file so don’t hesitate to check yours.

If you want to understand more about your credit score, then here’s 6 surprising factors that could be affecting it.