By: James Miller
Before you begin reading this article here are some useful definitions. An arrear is a legal designation and is a means to indicate when you are past due in making monthly payments on a credit agreement. They will be ‘in arrear’ from the date that their first payment is missed. The term ‘arrears’ is most frequently used when describing over due payment of mortgage, rent, personal loans or credit cards and also child support and taxes.
A ‘CCJ’ refers to County Court Judgement. This refers to a judgement from a County Court against someone who is presently in debt to another party (a person or business) or a case where they have not fulfilled the terms of a credit agreement. The Judgement will administer an acceptable instalment timetable with the idea that the person in debt will eventually be able to cover what they have borrowed. These judgements are a matter of official public record and will have an impact on the debtor’s chance of being granted further credit for the next 72 months.
A default is a term that is used to refer to when you’ve violated your borrowing agreements. If you have missed a payment on a mail in account, for example, they might put a Notice of Default on to your credit file. This will reflect badly on your credit report at some point when you wish to request additional credit.
A credit record is basically a written record of what credit that you have had in the last 6 years. It indicates the amounts you have borrowed and if you have missed any payments etc. A credit record allows would-be loan companies to look at your financial history to enable them to make a decision as to whether to give you credit. The information on your report is assembled by credit reference agencies for example, Experian and Equifax. They use statistics from public sources (e.g. the electoral roll, legal judgments etc) and from loan companies as well as financial institutions: e.g. credit accounts, credit applications.
First of all, get an up-to-date copy of your credit file to see if there are any inaccuracies on it such as a satisfied County Court Judgment (CCJ) that is still showing as unsatisfied or debt that is still showing as outstanding. You can get a copy of your report from one of the credit referencing agencies such as Equifax, Experian or CallCredit PLC for around �2.
If you do see any errors or inaccuracies, these should be notified to the relevant lender in writing.
Check that you don’t have any financial associations or financial connections on your file that aren’t relevant. For example, if someone you have lived with previously – or even someone who was at your address before you – is shown as still being there on your report, this could affect your credit rating.
Make sure that you are on the Electoral Roll – especially if you have recently moved. This can seriously affect your chances of getting credit if you are not showing on there.
At all costs, avoid companies who say that they repair your credit! Any changes that need to be made to your credit file can be instigated by you. You do not need to pay a third party to do it on your behalf.
Keep checking your credit report regularly – this way you can keep an eye on it.
If an application is refused, do not make repeated applications again or elsewhere. Find out why you were declined and take steps to put it right. Lots of declined applications on your file will make the situation worse.
Finally, when making an application, always fill in the correct details each time, especially moving home dates. Failure to do – or even a slip of the pen – could see you being refused credit.
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