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How to improve your credit record

Since the onset of the credit crunch it appears that many of the high street lenders have restricted their lending. Personal loans have become difficult to come by. Any slight bad credit and the applicant may find that his or her application is declined. Where lenders were generous in the past, showering their customers with offers of loans, now they are being so restrictive with their criteria as to exclude most applicants. Many of the high street banks would not lend unless you have been a bank account customer with them for some time.

At times like this it is very important for everybody to look after and nurture their credit record. It is true that there are a number of things that everybody can do to improve and maintain a good credit status so as to avoid the frustration and disappointment of rejection.

Check your Credit Record

First, request a printout of your credit file from one of the main credit agencies, Equifax, etc. All you need to do is send £1 and request your file. Study the information carefully. If there is an item that is incorrect you have the right to correct it by writing to the credit agency concerned. If you disagree with anything in your file you have the right to place a Notice of Correction which will be seen by any lenders who search your file. If you find that you are behind with any loans etc consider whether you could bring your payments up to date.

Register on the voter's roll

Many lenders would decline an application if the applicant is not on the electoral register. Make sure you register as soon as you can. However, please bare in mind that it may take a few months for your name to appear on the electoral register.

Establish a good credit history

Many applicants are declined not because they have bad credit but because they do not have past credit history to show to the prospective lender. If that's your case and you find that your credit file looks bare, it is important that you improve your status by taking on some credit, without over committing yourself. A good way to do that is by obtaining a credit card. In the first instance approach your bank. If they are not prepared to help you could apply to credit card companies which are more likely to accept people with slightly blemished credit history, such as Capital One and Vanquis.

When you have received your card resist the urge to hit the shops. By all means use the card but use it sensibly. Take advantage of the free credit it provides but pay back the full amount on the right date so that you don't incur any interest charges. After several months of timely repayments your credit history will look much better.

Tidy up your credit

You may have been careless with your credit in the past. Now it is time to turn a new leaf and tidy up your finances. Make sure you catch up with your council tax, telephone, electricity, gas and other regular bill payments. It is useful if you arrange an overdraft facility with your bank, but be very careful with it. It is very important that you do not exceed your overdraft so that you do not incur any charges.

Finally ...

... try to establish a stable residential and employment history if possible. Lenders would like you to have been at the same address for at least a year and with the same employer for at least six months. Plan ahead, so that you apply for the loan before you move house, or before you change employers, not after. Other details that will help your application is having a land line telephone number and, what most people don't realise, being able to provide an email address. Some lenders would not consider an application if the applicant cannot provide two telephone numbers, one of which must be a land line, and an email address. Indeed, some lenders would only provide you with the acceptance notice by email. So be prepared.

We all know that in the last few years credit is not easy to easy to come by, particularly if you have credit problems. Searching for the right loan can be a frustrating and stressful experience. This is why it is so important for everybody to improve and preserve their good credit record. Follow the advice in this article to avoid the usual pitfalls and at the same time maximise your chances of being accepted the first time.