In recent weeks, the news has been full of stories reporting on the global credit crunch and how lenders are refusing more people credit with the aim of minimizing their exposure to debt and therefore to risk.

Your credit rating will be looked at when you try to get credit facilities (such as credit cards, loans, mortgages, mobile phone and broadband contracts and store cards) and when you go to open bank accounts and savings accounts.

In light of this, we have compiled a list of the best tips to help you to improve your credit rating so that you can increase your chances of getting the credit you want.

You can use the contents section to get some quick tips or click on the ones that interest you to find out more.

Contents

1. Pay on time
2. Register to vote
3. Check your report annually
4. Add a ‘Notice of Correction’
5. Don’t leave unnecessary ‘footprints’
6. Your mobile phone bill counts!
7. Keep an eye on your associates
8. Avoid ‘credit repair’ companies
9. Keep track of your County Court Judgements (CCJs)
10. Don’t lie
11. Be on your best behaviour
12. Close accounts you don’t use…
13. …But don’t be too hasty
14. Borrow sensibly to build your credit history
15. Read ‘How to improve your credit rating’ by compareandsave.com

1. Pay on time

• Each record of a credit account you hold will have a list of ‘status codes’
• These codes show whether you have made payments on time in the past
• Records of payments are kept for 36 months
• Your report will show details of payments made over the last 12 months
• Underneath them will be a summary of your payments over the last 36 months
• The summary will say how many payments have been made by up to three months late and over three months late
• The higher the status code, the later you have made payments
• If you regularly pay late, creditors are less likely to grant you the credit you request because you will present as a higher risk
• If you have a history of paying your bills a few days late every time and they do decide to give you credit, it will likely be at a higher interest rate

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2. Register to vote

• The ‘Electoral Roll’ shows when you have registered to vote in elections (but not necessarily the dates you lived at an address)
• Being on the Electoral Roll allows organisations to quickly and easily confirm that the name and address you have given on your application form is accurate
• It also allows lenders to check your previous addresses more easily
• This information helps them to prevent fraud and therefore lowers the risk of lending money to you which means they are more likely to say yes
• To register on the electoral roll you need to be British
• Ask your local authority for a form
• To find your local authority go to the UK central government website:

            ‘Directgov – Public services all in one place’

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3. Check your report annually

• Make checking your credit report a yearly task
• Your report can alert you to any fraudulent activity that is taking place in your name without you knowing
• It will also enable you to regularly remove out-of-date information and keep your credit score strong
• Get a free credit report from Experian 

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4. Add a ‘Notice of Correction’

• A ‘Notice of Correction’ is a short explanatory statement (up to 200 words)
• They can be added to an entry in your credit report to explain any circumstances surrounding the information or correct any information which is inaccurate
• This information will then be available to anyone who views your report in the future and those who have viewed your report in the last six months
• Lenders have to read this information but they do not have to take it into account
• Adding a ‘Notice of Correction’ can be a good idea if you have had a period of illness or misfortune that has resulted in you unusually making late payments
• Don’t add too many – this can deter lenders

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5. Don’t leave unnecessary ‘footprints’

• ‘Footprints’ are details of the applications you make and show you who has searched your file
• They are kept on your account for 12 months
• They provide information to lenders on who, why and when you have asked for credit
• When shopping around for credit, ask lenders to perform a ‘quotation search’ before you make a formal application
• This quotation will give you a general idea of whether you are likely to be successful or not if you formally apply
• If you get turned down for credit don’t then go on to make several more applications
• Lenders can view this as either desperation, an indication that you have applied for an unmanageable amount of credit or an indication of fraudulent activity on your account
• Ask your lender why they turned you down and try to fix the problem before applying again
• When you get your credit report, check for multiple searches by the same lender for only one instance of credit
• The credit reference agency will flag up repeat searches as ‘disputed’
• Ask the credit reference agency to remove these extra searches

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6. Your mobile phone bill counts!

• Mobile phone bill payments also appear on your credit file
• This will lower your credit score and could even affect your chances of getting further credit such as mortgages
• Missed payments will stay on your account for three years

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7. Keep an eye on your ‘associates’

• Associates are those people that you have a financial link to
• These links are created through joint judgements, joint accounts and joint credit applications or from information you gave to lenders
• Information about an association is kept on your record indefinitely
• Financial details about your associate are not kept on your report
• If you are no longer associated with someone on your report, and can provide further information to support this, a credit reference agency may be able to break the link between you
• If you have bad credit history and associate yourself with someone with a good credit history, their score will decrease and yours will rise and vice versa

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8. Avoid ‘credit repair’ companies

• Credit repair companies will attract customers by saying that they can improve your credit score and therefore make it easier for you to get credit
• They charge for this service
• If you find something wrong with your report, a credit reference agency will remove or alter it for free
• The Office of Fair Trading has warned that information given by credit repair companies may be misleading, wrong or worsen your financial situation

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9. Keep track of your County Court Judgements (CCJs)

• If you have settled a CCJ, make sure it is shown as settled on your credit report
• If it isn’t, contact the County Court and ask for a Certificate of Satisfaction (this will cost you £10)

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10. Don’t lie

• Make sure you tell the truth on any credit applications you make
• If the information you provide doesn’t match that on your credit report then it will be taken as attempted fraud
• Lying could seriously harm any applications you make in the future

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11. Be on your best behaviour

• If you are having trouble making repayments, talk to the lender
• They should be able to arrange a repayment schedule that you can manage
• This is better than burying your head in the sand and will reduce the chances of it being recorded as a missed payment on your credit history
• Lenders like to see evidence that you can handle your finances well
• It makes you more attractive to them because you present a lower risk

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12. Close accounts you don’t use…

• If you have an account that is providing you with credit you don’t need (e.g. an unused credit card without a balance);
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• This available credit will put off lenders from giving you more

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13. …but don’t be too hasty

• If you have missed payments on an account within the last three years, don’t close it until the missed payment has dropped off your file
• If you do, the record of the missed payment will stay on your account for a further six years

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14. Borrow sensibly to build your credit history

• Lenders want to see evidence of your ability to manage credit responsibly
• They will be happy to see that you have a track record of successfully managing credit
• This will be demonstrated by making payments on time and by clearing your monthly credit card balance
• If there is no evidence of this on your report, lenders will see you as higher risk and will be put off from lending to you
• A way to solve this is to get a credit card and use it to pay for something that you regularly pay for like petrol or shopping then put the money aside elsewhere and pay off your monthly balance each month
• If you have a bad credit history, but have repaid all of your debts, you could try applying for a ‘credit card for bad credit’. The interest rates are high, but this is often the only way you will be able to rebuild your credit score
• This will enhance your credit file
• Be warned that credit you are given initially will likely be charged at higher interest rates because you represent more risk to the lender
• Another option is to associate yourself with someone with a good credit history by making a joint application
• Be warned that this will infringe on the other person’s credit file and may lower their credit score 

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 15.  Read our guide

• Find out what a credit report is and what it means
• Learn more about your credit rating and credit score
• Use the helpful links within the guide to get further information
• Read ‘How to improve your credit rating’ by compareandsave.com

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Saving money isn’t easy. First you need to find the money to save and then you need to find an account that will give you the best return.

We thought we would take some of the hassle out of saving for you and provide you with our top ten savings tips.

If you need more information, our ‘Guide to savings accounts’ is there to talk you through some of the essentials, in more depth, so that you can get yourself the best savings account for your individual needs.

Contents

1.    Divide and conquer

2.    Pay day = save day

3.    Interest-ing

4.    Time does = money

5.    Learn to walk before starting to run

6.    For richer or poorer

7.    Forms, forms everywhere

8.    Inflation

9.    That old chestnut

10.  Don’t forget your ‘shrapnel’

1. Divide and conquer

• Divide your savings into three areas. Save for the short term, medium term and long term.
• Short term savings should cover your day-to-day needs
• Medium term savings should be in preparation for buying a car, paying for a deposit on a house or paying for an expensive holiday
• Long term savings are those you will use when you retire

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2. Pay day = save day

• When you get paid, transfer any money you don’t need within the next week from your current account to an instant access savings account via online banking
• When you know you are going to go shopping or if a bill is due, transfer the amount of money necessary into your current account
• At the end of the month, any money you have left in the instant access savings account can be moved to a mini-cash ISA or another higher interest paying account
• If you don’t have online banking, this method won’t really be suitable. However, try to save some money each month to get into the savings habit

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3. Interest-ing

• Try to remember that interest given on savings will be taxed at your highest rate
• You are entitled to £3000 (£5,100 from April 2010) worth of tax free savings in each tax year when you save in a mini-cash ISA (Individual Savings Account)
• If you have any of this entitlement left then consider making use of it to boost your savings even more

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4. Time does = money

• Remember that some savings accounts have better interest rates if you agree to leave your money untouched for a longer period of time
• Make sure you stick to the terms and conditions regarding when you can access your money otherwise you may lose some or all of your interest

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5. Learn to walk before starting to run

• When you start saving, only contribute to your short term savings
• This will prepare you for those unexpected expenses, such as the car breaking down or the washing machine breaking
• When you think you have enough saved to cover you in times of hardship begin saving for the medium term

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6. For richer or poorer

• If your spouse does not pay taxes, or pays basic rates, but you are a higher rate taxpayer, transfer any spare savings into their name
• This then uses their spare personal allowance and prevents tax being charged on the interest earned

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7. Forms, forms everywhere

• If you have an ordinary savings account and are a pensioner or non-tax payer, make sure you fill in form R85
• This will mean that you can receive bank and building society interest without having tax deducted

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8. Inflation

• When choosing a savings account, consider the effect of inflation
• Inflation currently stands at 2.2% (as at February 2008)
• Make sure you choose an account with an after-tax AER that at least matches inflation or your money will buy less as each year passes (decrease in value)

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9. That old chestnut

• Don’t forget to shop around
• There are hundreds of products out there to choose from
• Be sure to know what you need and want before you start considering products
• Use our ‘compare savings accounts’ service for a clear picture on which account will offer you the best rates and deals and to make the switching process easier

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10. Don’t forget your ‘shrapnel’

• A recent Building Society study found that across 50 households the average amount of £4.41 was found hiding down the back of our sofas
• When you return home from shopping take all of the 1ps, 2ps and 5ps out of your pocket/purse and pop them in a jar. It will soon add up and can be used for treats like shoes and gadgets

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In the last two weeks, both Npower and EDF Energy have increased their gas and electricity prices. Because of this, we thought you might like to know about a way of reducing your heating bills by better insulating your home. What’s even better is that, if you satisfy certain criteria, it won’t cost you a penny.

According to the Energy Savings Trust, a third of a home’s heat is lost through the walls. Cavity wall insulation can prevent this loss and save you around £90 a year on your heating bills. Loft insulation should add an extra £110 on average to this amount saved.

British Gas and Npower are offering free home insulation, worth about £600, to anyone over 70 and those on certain benefits.

What’s even better is that it doesn’t matter how much you earn and that you don’t need to be a current customer of either company. British Gas is running the initiative as part of the government’s carbon emissions reduction target (Cert) scheme. Both will offer cavity wall and loft insulation absolutely free of charge to every homeowner in the UK who is over 70 or on certain benefits.

Under the Cert scheme, energy companies are required to spend £1.5bn over the next three years on the installation of energy efficiency measures in the homes of the elderly and those on low incomes.

To qualify for the scheme you must be over 70 or in receipt of at least one of the following benefits:

• Council tax benefit

• Housing benefit

• Income support

• Income-based Jobseeker’s allowance

• Attendance allowance

• Disability living allowance

• War disablement pension which includes either mobility supplement or constant attendance allowance

• Disablement pension which includes constant attendance allowance

• State pension credit

• Child tax credit where the relevant annual household income is £14,600 or less

• Working tax credit where the relevant annual household income is £14,600 or less

The scheme is not just for homeowners. If you live in privately rented housing, and receive any of the above benefits, you can also apply as long as you have the landlord’s approval.

For further energy saving ideas please read our article: ‘Top tips to save you money on your energy bills’.

For additional information and to apply:

Ring British Gas on 0845 605 2535 and quote ‘JOU’

OR

Ring Npower on 0800 02 22 20
 

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