While there isn’t a single piece of data protection legislation in the US, most of the credit score information is protected under the Fair Credit Reporting Act (FCRA) and it provides very similar consumer protection to the UK’s Data Protection Act and the EU Data Protection Directive, which might also apply if you do business or work overseas. The credit system focuses on debt and repayment history, employment history, continued residency, and the number of applications submitted for obtaining a loan. Since most lenders start by running a credit rating check, finding a way to improve your credit status can be a vital means of increasing the favourability of any application. In my opinion, the first thing you should do is to verify your credit report and understand what exactly affects your credit history.
Checking the Credit Report
To check a credit report, I recommend the following two steps:
- Request and check the credit report thoroughly: Regular and detailed report checks from a reputable company, which you can find here, may reveal discrepancies and even identity fraud attempts. If you detect any of these two issues, alert the lender at the earliest opportunity.
- Spring-clean the report: To spring-clean your credit report, update your personal data with accurate and truthful information; inform the lender if you use a joint account; cancel previous credit agreements if no longer in use and ensure that the lender mentions this on the file; prove that you can manage credit responsibly by paying off balances in full and on time.
After doing all these, run a new credit rating check to make sure that the lender has updated the information.
Improve and Maintain a Healthy Credit Score
A few things you can do to improve and maintain your credit rating are:
- Avoid missing mortgage payments: I know, from my own experience, that lenders focus more on missed mortgage repayments than missed loan or credit repayments. If specific financial difficulties prevent you from paying off your monthly mortgage balance, talk to your lender immediately. The lender may find a solution to help you pay the balance and maintain a good credit status.
- Provide Truthful Details: Most lenders consider inaccurate or inconsistent information fraudulent. Thus, providing accurate details each time you apply for a new loan and mentioning antecedent credit issues is imperative to improve your credit rating and obtain the loan you need.
- Restrict credit checks: Each credit rating check leaves traces on your credit report. Since lenders may interpret these traces as evidence of fraudulent activity, allowing multiple lending agencies to check your credit report can be damaging for your overall credit status.
- Close Unused Accounts: Using numerous accounts prevents you from keeping track of monthly repayments, which may result in penalties and lower credit scores. By closing some of the accounts you do not really need, you can manage finances more efficiently.
- Prove Stability: Lenders may also look for factors that demonstrate stability. Some of these factors include a long history with the same bank and employer, and living at the same address for many years.
One more thing you can do to improve and maintain a high credit rating is to protect your identity. To do this, shred the personal documents you no longer need and avoid writing down sensitive data, such as PIN and password details. If you are looking for additional information about performing a credit rating check on yourself and improving your credit status, you can find information.