The Dos and Don’ts for a healthy credit report

Money 2016-12-23
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Having a good, clean credit report is vital when it comes to looking after your finances. But what should and shouldn’t you be doing?

Achieving and maintaining a perfect credit score is not easy; there are many hoops to jump through. Most of them we already know, such as paying bills on time. Others are not quite so obvious, here's our simple guide to the Dos and Don'ts.

Do

- Register to vote
Being on the electoral register helps potential lenders verify your identity so make sure you’re registered at your current address. It’s an extremely quick and easy way to improve your credit score.

- Know your numbers
The perfect amount of credit utilisation is around 10-30%. So if you have a £15,000 limit on a credit card, try not to charge more than £4,500 at any one time.

- Play by the rules
Sometimes it can be tempting to get out of that gym membership by just cancelling your direct debit, but without proper account closure, you could be making yourself vulnerable to complaints from the company and ‘missed payments’ creeping on to your credit report.

- Sanity check closed accounts
Certain accounts, such as utilities, can take weeks to even themselves out once you’ve requested closure, so be sure they’re settled before you forget about them. If you’re moving away, leave a forwarding address, and, just to be safe, it’s always wise to give them a call back after a month or so just to double check there’s nothing left outstanding.

- Financially de-link
If you’ve ever been financially linked to someone that you no longer need to share an account with – whether that’s a friend, a housemate or an ex-partner – de-link from them as soon as you can, to ensure their financial behaviour doesn’t reflect on you.

Don’t

- Underestimate the effect of a missed payment
A missed payment will stay on your credit report for at least six years, so make sure you pay all of your bills on time.

- Be afraid to look
Checking your credit report does not negatively affect your score. In fact, it doesn’t affect it at all, no matter how many times you check it. So sit back, relax and check away.

- Forget your past
It’s not always easy to remember every address you’ve ever lived at, especially if you’ve moved around a lot or have been somewhere for a very short amount of time. But having a full, detailed record of your past addresses is absolutely vital for getting that all important excellent credit score.

- Worry too much
Credit reporting is there to help everyone, from businesses to consumers. It’s not used to spy on you, and information such as how often you’re looking at products on price comparison sites, your age and your salary is not available for all to see.

Hitachi Hints and Tips is intended to be informative and interesting. It does not constitute financial advice, and you should always do further research when making any financial decisions. All information was correct at date of publication.

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