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When you want to borrow money a prospective lender will examine your credit rating - this information available from rating agencies such as Experian.
Your credit report is your financial CV, and it is this which allows lenders to determine what kind of deal to offer you or whether to turn you down. It's also an invaluable source of information that can help to put you in control of your finances.
But did you also know that your credit report doesn't only list your credit cards, loans and mortgages, it can also include anything that involves giving you credit, from your mobile phone account to a shopping catalogue account.
It also gives you a snapshot of what you owe and the status of your credit agreements. It's all in one place, so it's a lot simpler than ploughing through old files and records to find the information. This helps you keep track of any financial commitments by seeing all your borrowing in one place. And it contains contact details for the organisations that have given you credit . That makes it easy to let them know if your circumstances change, you lose your wallet or your records are mislaid or stolen.
Your report also records any older accounts that may have been closed which may be useful if you ever wanted a full list of all the credit you have ever taken out.
Credit applications stay on your report for 12 months, so you can quickly check that you aren't reapplying to a lender you've already considered who's rejected you.
Also, your credit report shows if any lender has misunderstood your request for information as an application or has searched your report more than once in response by mistake. You may find that you have multiple searches by the same lender on your report. If this is an error it can be deleted by contacting the organisation responsible and explaining the true position. If these incorrect searches stay on your report, other lenders may think that you're desperate for money or even that a fraud is being planned.
Your report can also help to protect you against identity fraud. Hence, if you don't recognise searches on your report, it may be the case that someone is applying for credit in your name. If you fear that you may be a victim of identity fraud, alert your lenders and the authorities immediately.
Also worth noting is that lenders use the information from the electoral roll to check that you are who you say you are and live where you say you live, so you should make sure your current address is correctly registered. And your report tracks your repayment history for every credit account you have ever opened. It can act as a reminder that you had problems with a particular lender or account and shows which lenders are most likely to make you an offer in future.
If there is an entry on your report that you don't agree with, you should be able to remove this, provided you have the necessary proof. You can also add an explanatory note if special circumstances, such as illness, caused problems. Lenders will see this and may take it into account when deciding whether to make you an offer and what terms, such as interest rates, to set.
Click here to get free, unlimited, online access to your Experian credit report for 30 days with CreditExpert.
30 April 2007 © Moneyextra.com
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