Credit Reports and What Actually Affects Them
Credit scoring is widely misunderstood, and the misunderstandings lead people to worry about harmless things while ignoring the factors that matter.
What genuinely matters
Payment history. Missed payments are the single most damaging entry and remain on the file for years.
Credit utilisation, the proportion of available credit currently used. Lower is better, and consistently high utilisation signals stress even where payments are made.
Length of credit history. Older accounts help, which is a reason not to close your oldest card.
Recent applications. Several in a short period suggest difficulty obtaining credit.
Public records such as court judgments and insolvency, which are severe and long-lasting.
What matters less than people think
Checking your own report, which is a soft search and has no effect.
Not having debt. A file with no credit history is difficult to assess, which is why people who have never borrowed sometimes struggle.
Small balances carried briefly, which are unremarkable.
Your income, which is not on the credit file at all, though lenders consider it separately.
Errors
Files contain errors more often than expected: accounts that were settled showing as open, addresses that are not yours, entries belonging to someone with a similar name.
Financial associations with a former partner persist after separation and link your files. They must be removed explicitly, and this is frequently missed.
Check all the main agencies, since lenders report to different ones and an error may appear on only one.
Improving a thin or damaged file
Register on the electoral roll where applicable, which is a straightforward verification improvement.
Keep utilisation low by paying down before the statement date rather than after, since the reported figure is the statement balance.
Maintain a small amount of well-managed credit rather than none.
Time is the main factor for damage. Adverse entries drop off after a defined period, and nothing legitimate accelerates that.
Credit repair offers
Companies promising to remove accurate adverse information cannot do so. Anything they can legitimately do, you can do free.
General information rather than financial advice.
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