When applying for a loan or credit, lenders will gain access to credit reports to find out about your credit history. Unfortunately, this credit report stays with us for life so any mismanagement of credit when young may affect you many years after you have sorted out your finances. Reasons why your credit rating may be bad include mistakes or missing loan payments, checks bouncing, and late payments on your credit cards and other bills.



It may therefore be useful for you obtain a copy of your credit history so you know exactly what it says about you and you are made aware of any potential problems. This means that you can take steps to try and reduce the damage of your rating by making explanations, especially if you have been made bankrupt in the past. You might also want to close accounts that you don't use and spread your credit card debts between a couple of accounts.

Another important reason to check your credit rating is to make sure that there are no mistakes. Only you will know if all the information is correct and you don't want the report to be released and accepted by lenders if there are any mistakes. One of the most important things to check for is the reporting of errors for late payments. If you do find there are mistakes then you need to contact both the credit agency and the creditor to explain the situation and this can then be investigated. In some cases, the creditors never bother to dispute your case, especially if the money involved is low and it occurred many years ago. If they don't respond within 14 days, the bad credit is struck off your report, instantly improving your credit score. Disputing cases is therefore the most direct way to improve your score.

In recent years, there has been a massive increase in identity fraud, which is when somebody uses your identity to make payments or open credit card accounts. It is very difficult for you to identify if this is happening to you. However, it is advised that you obtain a credit report each year so you can check to see of there are any accounts that have been opened by someone other than you. Another sign of someone trying to use your identity is if there has been many credit enquiries from companies that you don't recognise. It is also recommended that you check your account before any major decisions, which may require a credit check such as buying a house or applying for home or life insurance.

You can apply for a credit check online or through one of the third party companies. These are Equifax, Experian, and TransUnion. The advantage of obtaining an online credit check is that it is free and can be accessed immediately. If you are refused credit from a lender, you can apply for a credit report free of charge within 30 days of being refused. The disadvantage of this is that you have to use a local agency rather than an online source and this may take time.

It is so important these days that you apply for a credit report on a regular basis, especially with the increase in identity crime. The information that you gain from applying for a credit report gives you the power to make a difference and improve your credit and as they say knowledge is power!