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Credit History 'Can Improve Access To Cheaper Borrowing'

Aug 18, 2007
Having a history of borrowing money could help consumers secure better access to cheap loans, an industry expert has reported.

According to James Jones, consumer affairs manager for Experian, those with a credit file revealing a "proven track record" of meeting demands for payment on overdrafts, credit cards and personal loans are more likely to get a competitive rate of interest on their next application to borrow money. Mr Jones suggested that having such a credit history helps financial providers determine people's ability to make repayments and as a result claimed that those who have just turned 18 or have moved to Britain from overseas could face difficulty in being accepted.

He said: "If you have no credit history it can cause problems because lenders have nothing to base a decision on. They're not only looking to avoid people who have had defaults in the past but they're also looking for people who can show an ability to repay past credit on time, so it's a good idea to have some history."

Meanwhile, he suggested that borrowers take the time to look at their record history to ensure that it is up to date and accurate. One method consumers can take in improving their credit rating, Mr Jones asserted, is to make sure they are registered properly on the electoral roll. By doing so he claimed that lenders will check clients' name and address to make sure that they are living at the address records say they are. However, if they are not living there the expert reported that they could see their credit score negatively affected. "Just use credit wisely. Make at least the minimum repayments on your credits every month so that you don't have any arrears recorded on your credit report," he also advised.

And while the expert reported that regularly changing credit providers can help consumers take advantage of introductory deals such as zero per cent balance transfer offers, excessively doing so was reported as potentially harming their access to borrowing in the future. "A large number of these searches in a short space of time can ring alarm bell and can therefore affect your credit score. It can make it look like you're desperate for credit, or that someone might be using your details in identity fraud," Mr Jones warned.

Earlier this month, Cifas, the UK fraud prevention service, warned Britons looking to get credit against lying on their application forms. The organisation warned that those who fail to be completely honest when applying are not only unlikely to get a more competitive rate of interest but could also be barred from accessing any kind of credit. Findings from the company indicated that 77 per cent of women lie when filling in their form to cover up a poor credit history, with this proportion falling to 64 per cent among men. Meanwhile, nine and seven per cent of males and females respectively were reported to have bent the truth about their employment or salary details in an attempt to get a cheap loan.
About the Author
Tom Dawson writes for Essentially Home Loans where visitors can apply for secured personal loans online, we also specialise in bad credit secured loans for UK residents. Visit Today: http://news.essentiallyhomeloans.co.uk
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