Banks are pretty choosy about who they take on as customers. So your credit score is more important than ever.
Apply for a current account, credit card, mortgage, or even a mobile phone contract and it will be checked. Here's how to ensure your credit score is as high as possible.
First, get to know your credit report. It is well worth checking it once a year so you can make sure everything is accurate and sort out any errors promptly. By law credit reference agencies have to provide you with a copy of your credit file for £2. So ignore offers of expensive 'credit monitoring' services and ask for a £2 credit score. Alternatively, there are a couple of ways you can get a free report.
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Two of the big credit reference agencies, Experian and Equifax, both offer premium 'credit monitoring' services for around £70 a year. These come with a month's free trial. You have to set up a direct debit first, but you can still sign up, download your file, then cancel straight away. That way you get your credit score and there is no chance of you forgetting to stop the direct debit. Another option is to register with Annualcreditreport.co.uk, who offer a free annual credit check.
Once you've checked your report, sort out any problems with it. Unless you have had serious debt problems in the past (such as being declared bankrupt), it is relatively easy to improve your credit score. First, make sure you have as much information as possible on your report (it's not unusual for firms to reject people because they don't have sufficient credit history).
So check that your bank has passed on information about your current accounts, credit cards and any other products. If you aren't registered on the electoral roll, do this too, as "if you're not on the roll, it's unlikely you'll get any credit", says Martin Lewis on MoneySavingExpert.com.
If you have split up with someone with whom you shared a joint product, such as a mortgage, make sure you inform all the big credit reference agencies Experian, Equifax and Callcredit. Ask for a 'notice of disassociation', otherwise your credit report will remain linked to theirs. If they subsequently rack up a bad debt it will reflect badly on you.
Finally, don't fall into a vicious circle of rejection. Every time you apply for a financial product a firm will check your credit record. This leaves a 'footprint' on your record. Too many and you'll get rejected purely because other firms will worry that you've applied for too many products. So if you get rejected by any firm check your credit file straight away, find out what the problem was and then resolve it before applying for another product. In short, when it comes to credit, try and stay squeaky clean.
