Credit Repairs
A credit rebuild, or credit repair, is something we might have to carry out at least once in our lives. That is because at some time in our lives most if not all of us will require some form of credit. It does not matter whether it is for a mobile phone, a car, or a major purchase like a home. Few of us have the means to pay cash up front for what we want, and sometimes it is impossible not to have credit, telephone rentals for example. We need credit, and there are plenty of companies who are willing to provide it. If, however, things have gone wrong for you in financial terms you may need to do some credit repair.
For most of us, obtaining credit might not be such a difficult thing. We turn 18, get a job, have regular income, take out a mobile phone on credit, get a credit card and so on, and pay our bills as and when they come in. Over time we improve our credit standing and virtually walk through life getting whatever credit we need.
Why a Credit Rebuild Is Sometimes Necessary
Unfortunately, not everyone is in such a favoured position. Due to the economic climate you may have lost your employment, been forced into early redundancy, or had to contend with other factors which have conspired to put severe financial pressure upon you. You might have CCJ’s against your name, and/or entered into an Individual Voluntary Arrangement or even bankruptcy as the debts have piled up and you are no longer in a position to pay your creditors. Perhaps it should come as no surprise that credit card debts in the UK are so high. Total credit card debt in May 2011 was £57.2bn. At the end of 2010 there were an estimated 63m credit and charge cards in the UK. That’s one million more cards in circulation than there are people living in the UK.
Once You Have Cleared Your Debts
What happens then after you are no longer in serious debt, after your IVA has finished, or you are no longer bankrupt? Thankfully it does not mean that you can never get any credit again. What it does mean is that you will need to do some work in order to repair your credit standing. It should also be said at this stage that you should also be extra careful not to put yourself in a position where you find yourself once again in serious debt or in need of extensive identity theft protection for future mishaps. Your lesson has been learned the hard way, and in future you will only ever take on credit you can afford.
Credit Repair Involves Some Looking Back
Before you look to the future you need to look back at your past. By that I mean that anyone you ask for credit will want to see your financial history so they can make an informed decision. So, you need to view your own credit report to see what potential lenders will be able to see about you. There is no point in trying to get credit, being refused time and time again, only to find out at a later stage that there are things on your credit report that are inaccurate, and had a negative influence on lending decisions. This is why it is important as part of your credit rebuild to check your own credit file.
Credit Reference Agencies
The 3 main credit reference agencies in the UK are Experian, Equifax, and Callcredit. Potential lenders will likely use at least one of these companies to check your credit report. These are the companies you should obtain your credit file from to being the process of doing a credit rebuild. The smallest of the 3, Callcredit is offering free credit reports for everybody applying online who fulfills certain criteria. This is a step in the right direction, and it would be good to see the other 2 agencies following suit. Callcredit calls this new service Noddle, and is now up and running. Once you access your credit report you will then be able to see such things as: * Your credit score * Credit you already have – including the amount and payment history * Credit checks by lenders * Details of any County Court Judgments and Insolvencies * Addresses you’ve lived at during the last six years * People associated with you – their credit status may affect yours
By law you have a right to see your own credit reference file. If you apply by post this will cost you £2. Your letter should include: * your full name – also any other names you have been known by e.g. your maiden name; * your full address including postcode; * any addresses where you have lived over the past six years; * your date of birth; and * a cheque or postal order for £2 made payable to the credit reference agency. You should keep a copy of your letter and you may want to send it by recorded delivery.
The credit reference agency has 7 working days to send you your file after receiving your letter and fee. If you prefer you can download one of their forms to complete and send off. That way you know you have answered all the questions so they have all the information about you they will need. On the other hand, you could apply online, and get a credit search free of charge. The idea is that you sign up to their ongoing service (at a cost of course), but often the first month is FREE. Experian’s Credit Expert for instance gives you access to your credit file. It is then £7.99 a month for which they will notify you of any changes to your report over the period you are signed up with them. All you do is sign up, get your credit report, then if you wish just cancel the agreement before your first payment goes out. The other main companies usually run a similar scheme. This is of course dependent on you being in a position in the first place to provide bank details for them to set up a direct debit on your account. If not, you will need to pay the £2 and apply by post.
Credit File Reports and the US Model
I would like to see the American model in use here in the UK. In the US the Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — to provide a free copy of your credit report, at your request, once every 12 months. If you live in the US you can go online, phone, or use mail to obtain your reports, though the request is made through just this one company, Annual Credit Report, not individually. I reckon that would be very useful to people over here, so that anyone can get a credit file report as a right, and without charge. Once you have your credit details in front of you, either in hard copy or via the Internet, then you can see if all the information is accurate and up to date. If, not, you will need to ask for corrections to be made to your credit file as a first step to repair your credit. See the page on credit file checks for more information and help. A credit rebuild can be a time-consuming affair, but if the end result is that you can get credit, and do so on favourable terms, then it must be worthwhile doing on your part.
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