A good credit history means that lenders are more likely to want to lend to you, will offer you better rates of interest, and may offer to lend you larger amounts.  Conversely, having a poor credit rating will limit your options for borrowing and you are likely to be charged a higher rate of interest. 

The main Credit Reference Agencies, Experian, Equifax and TransUnion (formerly CallCredit), gather information about your credit history and create your credit report.  This holds basic information about you – name, DOB, address, electoral register.  Also contains credit history – bank accounts, credit cards, loans, and even some mobile contracts and utility bills

It shows how well credit is managed – whether repayments are made in on time, and in full, shows missed payments and late payments.  Will stay on file for at least 6 years.

It is used mainly used to help lenders to decide how much of a risk it is to lend you money.  Can also be used by employers and landlords to check basic information about your credit history.

If you are applying for a loan, mortgage or credit card, then it’s a good idea to access your credit report first, just to check for errors. 

Each time you apply for credit it appears on your credit file.  Repeatedly applying for credit can affect your credit score badly, because it might indicate that you are having financial problems. 

If you are planning on applying for new credit, then using Money Saving Expert’s soft search calculator can be helpful.  This allows you to search for the best deals, without it affecting on your credit record.  It will show you which loans or cards you are most likely to be accepted for, allowing you to apply only for the ones with the highest chance of acceptance. 

A simple task to help you take control of your money is to check your credit report.  Checking it doesn’t affect it, so you can check it as often as you like.

All Credit Reference Agencies must allow you to check it free of charge, often done by offering a free trial, before charging up to £14.99 a month.  However, there is also a way to check completely free of charge, and without having to remember to cancel a subscription.  By going to Noddle (TransUnion), ClearScore (Equifax) and Money Saving Expert (Experian)  you can get genuine free access to your credit report.

• Look through every piece of information in your report and check it for errors. 
• Make sure that your address is correct, even on old accounts that you no longer use. 
• Check any defaults – late or missed payments and query them if you don’t think they are correct. 
• If you no longer have joint accounts with someone, then make sure that is reflected in your credit report. 
• If you have a huge number of unused credit and store cards, then cancelling some of them is often a good idea.