EACH week The Scotsman gives you a top ten guide to pertinent financial issues. Everyone who services any kind of debt has a credit score and it's more important than ever to keep it in good shape. Jeff Meek, Edinburgh managing partner of accountants French Duncan, offers his tips on how to manage your credit score.
1 STARTING POINTMake sure you know what your credit report is saying about you now by getting hold of a copy of your report from 3Callcredit, Equifax or Experian.
2 SCRUTINISE ITWhen you get your report check
it carefully to make sure that there are no incorrect entries and that your address is recorded correctly. Identity theft is an increasingly common problem so make sure that you have a full understanding of all the credit agreements recorded in your report. If you spot what you believe to be an error, contact the lender concerned and ask for further information.
3 CURB YOUR ENTHUSIASMSearching your credit report can affect your credit score as the number of times the report is accessed is itself recorded in your report and can count against you in a lender's credit scoring. So do not apply for any more credit at one time than you need to; ideally leave at least three months between each application. If you are seeking a mortgage, consider using a broker to approach lenders on your behalf.
4 UPDATE ITIf you have moved house recently make sure you have updated your record on the voters' roll. Consider making any applications for credit before you move as it will take time for your credit report to settle down.
5 MEET THE MINIMUMIf you have credit cards make sure you pay the minimum balance by direct debit so you never miss a payment – which would lose you points and can even lead to you being denied a mortgage.
6 COURT CLEANINGIf you have had any court judgments against you for unpaid debts in the past, see if you can get these dealt with by paying them and applying to the court to remove the court reference.
7 SPREAD THE RISKReports now show outstanding balances of credit cards and overdrafts and it is good to owe no more than 30 per cent of a card's limit. It may be worth balancing cards out to ensure none has large balances.
8 DOUBLE JEOPARDYKeep your individual bank accounts separate because while being married does not lead to bad credit, joint bank accounts can. If your spouse has a bad credit history then a joint account will mean that you do too. Keep accounts separate so at least one of you can get a mortgage. If you separate, even if you were not married but had joint finances, consider contacting all the credit agencies to ask for notice of dissociation to prevent your former partner's credit problems affecting your credit score.
9 CREDIT CONTROLClose old, unused accounts that may have been opened to take advantage of an interest-free scheme for consumer goods but never used again. Look at paying off small loan balances with your savings to reduce the number of loans that you have.
10 OUTLOOKIf you discover that you have an unattractive credit scoring, consider embarking on a six-to-nine-month detox programme, during which you make every credit card and other loan payment on time. This will go a long way to convincing any new prospective lenders that you are a worthwhile – and safe – customer.
