Have you ever considered how a default marker or CCJ could unexpectedly appear on your credit record? Often, you remain unaware of such entries until the moment you apply for credit and face a rejection. This scenario is surprisingly common. I will provide some actionable insights on the measures you can adopt to prevent such inconveniences. Indeed, it will be a significant disruption, but by actively monitoring and protecting your financial planning, you can be smart, maintain control and avoid potential setbacks.

 

Check credit record for any inaccuracies.

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A quick win to a good credit file is to make sure all your personal and financial information is correct.

Make sure that you’re on the Electoral Register. This will confirm your identity and address for verification and to determine stability.

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Build a positive credit history.

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A medium to long term win is to build a positive credit history. If you have a little or no credit history you can use a credit card builder, use them every month, then make the repayments every month and on time. Keep this borrowing/repayment routine up for 6-12 months for a positive history to work

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Keep on top of your bills and repayments

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Pay your bills on time and in full each month. This will show that you are responsible and reliable with money.

Keep your credit repayment to income ratio low to avoid the risk of financial difficulty. This is the percentage of your available credit that you are using. In a government paper using a You Gov survey it was found that 13% of borrowers were making repayments on unsecured credit which amounted to above 30% of their income and 9% to more than 40% of their income,

This is a high credit repayment income ratio for almost 40% of the borrowing population.

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Avoid making hard credit applications

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Avoid making too many applications for credit in a short period of time. This will create multiple hard searches on your credit file which can lower your credit score and make you look desperate for money. Most hard searches will stay on your credit report for up to 12 months

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Finally, don’t forget that a credit file is a document that can affect many aspects of your life. If you’re willing to do the necessary work you will increase your chances of getting the best deals and offers from lenders and creditors.

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Winnie Onyekwere LLB LLM

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