A lot of loan customers in the UK find themselves wondering, “should I get a copy of my credit report?” Well, considering the fact that lenders will certainly obtain a copy as soon as you apply for a loan, the answer is most definitely “yes.” Why would anyone enter into a business agreement blind? All this does is give the other party an enormous advantage. It is absolutely vital that borrowers obtain a copy of their own credit reports. It must be the very first step before anything else. That’s right. Before even thinking about what car to buy or where your next home should be, you need to get a copy of your credit report first. There are two key reasons.
Timing and budget
The question all prospective loan customers must ask themselves right away is, “is this the right time for me to apply for a loan?” Obtaining a copy of your credit report will help answer this important question.
Many borrowers, starry-eyed by their new home or automobile, are brought back to Earth at the bargaining table when their loan is modified to suit the bank or even outright rejected because they had bad credit they didn’t know about. Understanding what’s in your credit report will combat this and will help you decide if this is the right time to shop for a loan. Why even apply if you know your credit isn’t in good shape? That only leads to rejection or unfavorable loan terms. Instead, a customer armed with a copy of their credit report can decide when the time is right for a loan or, if getting a loan is absolutely necessary, budget ahead of time for the increased interest and fees associated with a loan for borrowers with bad credit. This is only possible when you know ahead of time what your credit looks like.
If you’ve looked at your credit report and determined that now is definitely not the time to apply for a loan because things don’t look great, congratulations on a very smart business decision. But how do you fix your credit now so you’re ready next time? Bad credit can happen for two reasons and both can be fixed. One just takes longer.
Credit repair: lender mistakes
Considering the enormous number of account transactions a lender makes just on an hourly basis alone, it’s no wonder that mistakes are made. A payment you made on time could be applied to the wrong account or missed altogether, dismissed to the electronic dustbin erroneously. Another possibility is, with the number of transactions, that your payment might be applied too late. Both of these actions can result in late payments or even loan default through no fault of your own.
Borrowers who get a copy of their credit reports on a regular basis are in a much better position here, increasing their odds of catching these mistakes quickly before small errors can grow into massive, credit-wrecking loan defaults. If you notice a mistake on your credit report, here’s what you need to do:
- Contact the credit reporting agency, either Experian, Equifax or CallCredit, who gave you the report. Let them know the specifics of what you believe the error is and tell them that this is in dispute. Tell them you are contacting the lender who reported the problem. Be sure to do all this in writing and record the details of your correspondence.
- Assemble all paperwork that supports your case, including copies of paid bills, cancelled cheques and electronic transaction records and the serial number of the transaction, if applicable.
- Contact the lender and notify them of the error. Be sure to support your claim with the facts from your documentation. Again, do all this in writing and keep a very detailed record of all correspondence. Keep fax receipts if you fax them your supporting data and send all mailed backup information by certified post. Keep a log of all phone calls with the full names of representatives and the exact dates and times of all calls.
- Be sure to end all calls with a courteous thank you and a call to action, asking what the next step is. Follow up diligently until the matter is resolved.
- Notify the credit reporting agency of the outcome of the dispute and make sure the creditor does it, too. Get a copy of your next credit report to verify that the mistake is no longer listed.
Credit repair: borrower mistakes
If the blemishes on your credit report are correct and you just have bad credit, remediation is more difficult. There is no easy fix for this type of bad credit. The best approach is to wait, pay all bills on time, and be a good credit customer from now on. Eventually, the good will outweigh the bad and your credit will be “repaired.” It’s hard to accept this in our instant gratification world, but correcting bad credit that’s definitely your fault takes time and effort.
