December 22nd, 2008 | 
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With the current worldwide financial climate being in such turmoil, applying for difficult to come by. But many potential borrowers don’t realise the importance of why to check a free credit report from one of the major credit reference agencies.
Without knowing it, your credit report might be revealing information that may hinder your ability to take out more credit. Some of this may not even be down to you. Worse still, it may even show that you have been the victim of identity theft!
Those people that have been rejected after applying for credit should definitely apply for their credit report data from at least one of the major credit reference agencies, such as Equifax. If you have been declined credit, ask the lender who refused you which of the agencies they were using to make their decision and their contact details. Then write to them requesting a copy of your credit file.
It is a good idea to ask for a copy of your credit file before applying for a loan so that any errors, or omissions, can be corrected before you apply. This could prevent a turn down, which would also be recorded on your credit file and might count against you in the future.
If you don’t already know how to check credit reports for yourself, then it is very easy to do. The major credit reference agencies will offer a free service if you write to them and ask them for the file information and there are many online services doing the same. As an early identity theft detection method, you can also join schemes whereby you are notified when certain changes are added to your credit reference file. This would alert you to sudden huge loan applications if someone was trying to clone your identity.
The free credit reports don’t show you exactly how the lenders will score you, but they give you a good basis for reviewing what they are likely to be looking at. In addition, lenders will also score you on other questions that they ask, such as your history with that lender, your annual household income and other details they ask you to divulge.
Your credit report won’t have details of anyone else living within your house, but it will have details of who the credit reference agency thinks are financially related to you, for example husband or wife. If this information is wrong, then it can be worth getting it corrected.
As an example, if your wife doesn’t have the same surname as you, but has a better credit rating than you, then you may improve your credit rating by marking yourselves as being financially related.
Conversely, if parent and non-dependent child, or others sharing a surname, live in the same house and aren’t financially related, it is worth ensuring that there isn’t a financial relationship being reported, in case they have a worse credit rating.
P.S. Watch this real case how do I get out of debt video.
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