Advertisement

Check your credit rating, and apply to cut your costs

Check your credit rating, and apply to cut your costs
Date of Publication: Thursday, 16 January 2014 10:59

Are you paying over the odds for your credit cards, loans, or mortgages? Consulting your credit report might help you determine whether you could apply for better rates on your lending.

 

Why is Your Credit File Important?

Your credit file is an important dossier of information. It includes the most recent six years’ worth of records concerning your application, lending, and repayment history.

 

The records are kept by credit reference agencies – namely Callcredit, Equifax, and Experian – and help lenders to assess your creditworthiness.

 

The strength of your credit report is a vital factor in a lender’s decision to accept or reject an application for credit. It may also determine the strength of the deal you are offered.

 

If you apply for a long-term 0% balance transfer credit card, for example, a lender witnessing a ‘good’ rather than an ‘excellent’ credit score may decide to offer a shorter term than the advertised maximum.

 

You are entitled to purchase a copy of your report for £2 from any provider. Equifax and Experian offer a one-month free trial, which grants unlimited access to a user's credit report, but you will need to cancel if you wish to avoid the monthly fee.

 

Credit Report

Find out more about what you can expect to find on your credit report.

 

Maintaining and Improving Your Credit Score

There are measures you can take to manage your credit history and avoid the issues that will look unfavourable to a lender.

 

One standard rule is to avoid making too many applications in a short space of time. Lenders may see this as a sign of desperation, or decide that you hope to take out more than one source of credit at the same time.

 

Other factors that may influence your credit score are the amount of credit you use and the number of applications you make.

 

Lenders want to see that you handle sensible amounts of credit responsibly. It is likely to raise alerts if you are regularly maximising your credit card limits or applying for new credit too frequently.

 

For young people who are not homeowners and who have not yet completed a payment agreement, specialist credit-building products can help to build up a solid impression of your creditworthiness.

 

General Dos and Don’ts to Improve a Credit Score

Do:

  • Make sure you’re on the electoral roll.
  • Pay bills on time. Just a few days late can make a difference.
  • Check regularly for mistakes or incorrect details on your credit record.
  • Apply for credit when you need it – applying for more than 4 forms of credit in a year can lower your credit score.
  • Consider specialist credit card providers which help people to improve a credit record.
  • End financial associations with ex-partners. Taking out a product jointly with them will affect your credit score.

Don’t

  • Use more than around 75% of your available credit limit, where possible.
  • Apply for more than one credit product at a time. Each application can negatively impact your credit score.
  • Leave old credit card accounts and direct debits open if they are no longer needed.
  • Take out more than two forms of credit within a six month period.

Find out more about the determinants on our finance blog.

 

The Possibility of Cheaper Deals

Learning more about your credit score is important, for a number of reasons.

 

Firstly, it gives you the chance to query mistakes if you encounter them.

 

Secondly, it will help you take steps to correct any wrongs.

 

Thirdly - and perhaps most importantly - a good credit score is the gateway to cheaper credit, which could allow you to save hundreds on your existing deals.

 

Credit Product Rates

 

Credit Cards

While personal loan rates have steadily fallen in recent years, average credit card rates have been creeping towards 18%.

 

On that basis, transferring a credit card balance of £2,000 to a 0% deal for 24 months (a dozen cards are currently available at this term or longer) could save upwards of £350 in interest over the term if the balance is paid off evenly.

 

Mortgages

A little over two years ago, we were celebrating the availability of 90% LTV mortgages at a then-knockdown rate of 5.39% (Halifax, Yorkshire BS).

 

Fast forward to 2014, and the best deal currently available at this loan-to-value range is almost two percentage points lower, at 3.48% (Post Office).

 

On a £150,000 mortgage, this would save more than £3,600 (£160 per month) over the two-year offer period.

 

Soft-Searching

Initiating a so-called ‘soft search’ will allow you to view your credit report without registering more activity on it. And understanding what lenders see when they process an application will help you to make more realistic judgements about what to apply for.

 

Without an excellent credit score, applying for a table-topping deal is less likely to be successful. But discovering that you have established a good credit history will allow you to apply for cheaper deals with a measure of confidence.

 

Helpfully, some banks now alert their current account customers if they have been pre-approved for a credit card - a handy indicator that an application will not be wasted. Why not ask your bank if they operate a pre-approval system based on your history with them?


If New Year resolutions involve getting on top of your finances, you can't go too far wrong in getting your hands on your credit report and using that to assess whether savings could be made through cheaper forms of credit.

 

Keith McDonald

Which4U Editor

Thanks for reading! Follow us on Facebook and Google+ for updates. For the chance to win £500 in vouchers, enter our competition.

Thursday, 16 January 2014 10:59
Bookmark and Share

Make a comment on this article

Comment
Please enter the following letters in the box below.
We're very sorry for this but we just need to ensure
that you are not a computer.

Top 5 Credit Cards

Card
Balance Transfers
Purchases
Typical APR (variable)
Apply
View Full Table >
0%
41 mths
0%
6 mths
18.9%
Representative Example: If you spend £1,200 at a purchase interest rate of 18.95% (variable) your Representative APR will be 18.9% (variable).
0%
41 mths
N/A
15.9%
Representative Example: If you spend £1,200 at a purchase interest rate of 15.9% (variable) your Representative APR will be 21.7% (variable).
N/A
N/A
18.9%
Representative Example: If you spend £1,200 at a purchase interest rate of 18.9% (variable) your Representative APR will be 18.9% (variable).
0%
27 mths
0%
27 mths
18.9%
Representative Example: If you spend £1,200 at a purchase interest rate of 18.9% (variable) your Representative APR will be 18.9% (variable).
N/A
N/A
11.1%
Representative Example: Representative 11.1% APR (variable) based on an assumed Credit Limit of £1,200. Standard interest rate for purchases: 6.9% p.a.(variable) Annual fee: £24. Your actual credit limit will depend on our credit assessment of you.

Advice

A fee of 3.5% will be applied, then reduced to 2.29% by a refund.

Introductory Offer
Balance Transfer Rate: 0% for 41 mths
Balance Transfer Fee: 2.29% fee
Purchase Rate: 0% for 6 mths
Representative APR
Purchases: 18.9% p.a. (variable)
Representative Example: If you spend £1,200 at a purchase interest rate of 18.95% (variable) your Representative APR will be 18.9% (variable).
Annual Rates
Balance Transfers: 18.9% p.a. (variable)
Balance Transfer Fee: 3%
Cash Advance: 18.95% p.a. (variable)
Standard Features
Credit Limit: Subject to Status
Interest Free Days: Up to 56 days
On-Line Banking: Yes
Approval Criteria
  • You earn at least £20,000 per year
  • You are at least 18 Years of Age
  • You are a permanent resident/citizen of the UK
  • You have NOT been declined for a Halifax or Bank of Scotland Credit Card in the last 6 months
  • You DO NOT any CCJs or have been made Bankrupt
  • You have NOT missed payments on your current store cards, credit cards, loans or mortgages
  • You ARE in employment (receiving an annual salary)
  • You can provide a telephone number that you can be contacted on

Advice

0% foreign transactions fees when using the card abroad.

Introductory Offer
Balance Transfer Rate: 0% for 41 mths
Balance Transfer Fee: N/A
Purchase Rate: N/A
Representative APR
Purchases: 15.9% p.a. (variable)
Representative Example: If you spend £1,200 at a purchase interest rate of 15.9% (variable) your Representative APR will be 21.7% (variable).
Annual Rates
Balance Transfers: 18.9% p.a. (variable)
Cash Advance: 29.9% p.a. (variable)
Annual Fee: N/A
Standard Features
Credit Limit: Subject to Status
Interest Free Days: Up to 56 days
On-Line Banking: Yes
Cashback
Standard Cashback Rate: 0.50%
Approval Criteria
  • You are at least 18 years of age;
  • You have had a permanent UK address for at least the last 3 years;
  • You do not have a history of bad credit (in other words, county court judgements or bankruptcy);
  • You have an income in excess of £7,500.

Advice

No foreign transaction fees on purchases and cash withdrawals abroad when made in the local currency. No cash withdrawal fees at home and abroad (interest is charged immediately on cash withdrawals and some independent ATM providers may charge a withdrawal fee).

Introductory Offer
Balance Transfer Rate: N/A
Balance Transfer Fee: N/A
Purchase Rate: N/A
Representative APR
Purchases: 18.9% p.a. (variable)
Representative Example: If you spend £1,200 at a purchase interest rate of 18.9% (variable) your Representative APR will be 18.9% (variable).
Annual Rates
Balance Transfers: 18.9% p.a. (variable)
Cash Advance: 29.9% p.a. (variable)
Annual Fee: N/A
Standard Features
Interest Free Days: Up to 56 days
On-Line Banking: Yes
Approval Criteria
  • You are at least 18 years of age;
  • You have had a permanent UK address for at least the last 3 years;
  • You do not have a history of bad credit (in other words, county court judgements or bankruptcy);
  • You have an income in excess of £7,500.
Introductory Offer
Balance Transfer Rate: 0% for 27 mths
Balance Transfer Fee: 2.75% fee
Purchase Rate: 0% for 27 mths
Representative APR
Purchases: 18.9% p.a. (variable)
Representative Example: If you spend £1,200 at a purchase interest rate of 18.9% (variable) your Representative APR will be 18.9% (variable).
Annual Rates
Balance Transfers: 18.9% p.a. (variable)
Cash Advance: 22.8% p.a. (variable)
Annual Fee: N/A
Standard Features
Credit Limit: Subject to Status
Interest Free Days: Up to 56 days
On-Line Banking: Yes
Approval Criteria
  • You are at least 18 years of age;
  • You have had a permanent UK address for at least the last 3 years;
  • You do not have a history of bad credit (in other words, county court judgements or bankruptcy);
  • You have an income in excess of £7,500.
Introductory Offer
Balance Transfer Rate: N/A
Balance Transfer Fee: N/A
Purchase Rate: N/A
Representative APR
Purchases: 11.1% p.a. (variable)
Representative Example: Representative 11.1% APR (variable) based on an assumed Credit Limit of £1,200. Standard interest rate for purchases: 6.9% p.a.(variable) Annual fee: £24. Your actual credit limit will depend on our credit assessment of you.
Annual Rates
Balance Transfers: 6.90% p.a. (variable)
Cash Advance: 24.9% p.a. (variable)
Annual Fee: £24
Standard Features
Credit Limit: £25,000
Interest Free Days: Up to 56 days
On-Line Banking: Yes
Approval Criteria
  • You are at least 18 Years of Age
  • You have a Good Credit History
  • You are a permanent resident/citizen of the UK
  • You earn over £10,000 per year
Introductory Offer
Balance Transfer Rate: N/A
Balance Transfer Fee: N/A
Purchase Rate: N/A
Representative APR
Purchases: 11.1% p.a. (variable)
Representative Example: Representative 11.1% APR (variable) based on an assumed CreditLimit of £1,200. Standard interest rate for purchases: 6.9% p.a.(variable) Annual fee: £24. Your actual credit limit will depend on our credit assessment of you.
Annual Rates
Balance Transfers: 6.90% p.a. (variable)
Cash Advance: 12.9% p.a. (variable)
Annual Fee: £24
Standard Features
Credit Limit: £25,000
Interest Free Days: Up to 56 days
On-Line Banking: Yes
Approval Criteria
  • You are at least 18 Years of Age
  • You have a Good Credit History
  • You are a permanent resident/citizen of the UK
  • You earn over £10,000 per year

Advice

Collect 0.5% unlimited cashback on all purchases in pounds sterling. Also, get commission free card purchases abroad!! No balance transfer fee applies for the first 3 months of account opening, after which time it will revert to 2.4% (Minimum £5)

Introductory Offer
Balance Transfer Rate: 0% for 12 mths
Balance Transfer Fee: N/A
Purchase Rate: 0% for 12 mths
Representative APR
Purchases: 15.9% p.a. (variable)
Representative Example: If you spend £1,200 at a purchase interest rate of 15.9% (variable) your Representative APR will be 15.9% (variable).
Annual Rates
Balance Transfers: 15.9% p.a. (variable)
Cash Advance: 27.9% p.a. (variable)
Annual Fee: N/A
Standard Features
Credit Limit: £25,000
Interest Free Days: Up to 56 days
On-Line Banking: Yes
Cashback
Standard Cashback Rate: 0.50%
Approval Criteria
  • YOU MUST HAVE A NATIONWIDE CURRENT ACCOUNT IN ORDER TO APPLY FOR THIS CARD
  • You are at least 18 Years of Age
  • You have an Excellent Credit History
  • You are a permanent resident/citizen of the UK
  • You earn over £5,000 per year
Introductory Offer
Balance Transfer Rate: 0% for 40 mths
Balance Transfer Fee: 1.69% fee
Purchase Rate: 0% for 6 mths
Representative APR
Purchases: 18.9% p.a. (variable)
Representative Example: If you spend £1,200 at a purchase interest rate of 18.94% (variable) your Representative APR will be 18.9% (variable).
Annual Rates
Balance Transfers: 18.9% p.a. (variable)
Balance Transfer Fee: 3%
Cash Advance: 27.9% p.a. (variable)
Annual Fee: N/A
Standard Features
Credit Limit: £50,000
Interest Free Days: Up to 56 days
On-Line Banking: Yes
Approval Criteria
  • You are at least 18 Years of Age
  • You have a Good Credit History
  • You are a permanent resident/citizen of the UK
  • You have a bank or building society account
  • You have an income over £25,000 p.a

Advice

10 Choice points for every £1 of eligible spend on the Choice Rewards American Express® Card. 10 Choice points for every £5 of eligible spend on the Choice Rewards MasterCard®.

Introductory Offer
Balance Transfer Rate: 0% for 24 mths
Balance Transfer Fee: 3% fee
Purchase Rate: 0% for 12 mths
Representative APR
Purchases: 23.7% p.a. (variable)
Representative Example: If you spend £1,200 at a purchase interest rate of 18.94% (variable) your Representative APR will be 18.9% (variable).
Annual Rates
Balance Transfers: 23.7% p.a. (variable)
Cash Advance: 27.9% p.a. (variable)
Annual Fee: £24 p.a.
Standard Features
Credit Limit: £50,000
Interest Free Days: Up to 56 days
On-Line Banking: Yes
Approval Criteria
  • You are at least 18 Years of Age
  • You have a Good Credit History
  • You are a permanent resident/citizen of the UK
  • You have a bank or building society account
  • You have an income over £25,000 p.a
Introductory Offer
Balance Transfer Rate: 0% for 40 mths
Balance Transfer Fee: 1.69% fee
Purchase Rate: 0% for 6 mths
Representative APR
Purchases: 18.9% p.a. (variable)
Representative Example: If you spend £1,200 at a purchase interest rate of 18.94% (variable) your Representative APR will be 18.9% (variable).
Annual Rates
Balance Transfers: 18.9% p.a. (variable)
Balance Transfer Fee: 3%
Cash Advance: 27.9% p.a. (variable)
Annual Fee: N/A
Standard Features
Credit Limit: Subject to Status
Interest Free Days: Up to 56 days
On-Line Banking: Yes
Approval Criteria
  • You are at least 18 Years of Age
  • You are a permanent resident/citizen of the UK
  • You have NOT been declined for a Halifax or Bank of Scotland Credit Card in the last 6 months
  • You DO NOT any CCJs or have been made Bankrupt
  • You have NOT missed payments on your current store cards, credit cards, loans or mortgages
  • You ARE in employment (receiving an annual salary)
  • You can provide a telephone number that you can be contacted on

Advice

Introductory Balance Transfer Fee of 3% is subject to a minimum charge of £3. Online account management is only available for existing Clydesdale Bank customers.

Introductory Offer
Balance Transfer Rate: 0% for 12 mths
Balance Transfer Fee: 3% (min £3)
Purchase Rate: 0% for 26 mths
Representative APR
Purchases: 18.9% p.a. (variable)
Representative Example: If you spend £1,200 at a purchase interest rate of 18.9% (variable) your Representative APR will be 18.9% (variable).
Annual Rates
Balance Transfers: 11.9% p.a. (variable)
Balance Transfer Fee: 3% (min £3)
Cash Advance: 27.9% p.a. (variable)
Annual Fee: N/A
Standard Features
Credit Limit: Subject to Status
Interest Free Days: Up to 59 days
On-Line Banking: Yes
Approval Criteria
  • You are 18 years or over
  • You are a UK resident

Advice

Online account management is only available for existing Clydesdale Bank customers.

Introductory Offer
Balance Transfer Rate: 0% for 12 mths
Balance Transfer Fee: 3% (min £3)
Purchase Rate: 0% for 26 mths
Representative APR
Purchases: 18.9% p.a. (variable)
Representative Example: If you spend £1,200 at a purchase interest rate of 18.9% (variable) your Representative APR will be 18.9% (variable).
Annual Rates
Balance Transfers: 11.9% p.a. (variable)
Balance Transfer Fee: 3% (min £3)
Cash Advance: 27.9% p.a. (variable)
Annual Fee: N/A
Standard Features
Credit Limit: Subject to Status
Interest Free Days: Up to 59 days
On-Line Banking: Yes
Approval Criteria
  • You are 18 years or over
  • You are a UK resident