Why Check Your Credit Report Before Spending Money This Christmas?
As a finance expert it is crucial that I highlight how to look after your money and your credit report this Christmas. You may spend months preparing the Christmas events: where to go, which parties to attend, what to wear, which gifts you’ll give. Quite how you’ll pay for all of this is often disregarded in the excitement.
It’s tempting to consider that you can always turn to your trusty credit card, bump up a personal unsecured loan or take on a new credit card deal and worry about working off the seasonal excess in the New Year. In today’s economic climate, that will not be possible, as lenders worried by the economic downturn and the rising tide of unemployment limit the amount of applications they accept to individuals with the best credit histories and consider downgrading spending limits or raising interest charges for people who can’t show they’re trustworthy borrowers.
So this year, it’s time to treat your finances to a pre-Christmas credit work-out. There’s a lot you are able to achieve in a couple of months – and you’ll enter 2013 in great shape.
Credit Report Induction
- You need to know how fit your financial circumstances really are before you decide where to concentrate your time and effort, so find your bills, credit card and bank statements and go through them carefully. Try to identify pointless spending which really can be eliminated to produce a excess money for Christmas projects.
- Take a look at your credit report – it’s the personal history of your credit cards, loans, mortgage along with other credit accounts, your repayment record along with other information finance lenders see when they decide whether to make you an offer along with what terms, such as interest rates and spending limits, to set. It will give you an overview of what you owe, how well you are managing – and whether you can justify borrowing any more. You can view your Experian credit report for free with a 30-day trial of CreditExpert.
- Set yourself a pre-Christmas budget. Note down your rent or mortgage, Council Tax, interest and repayments on any loans or cards, gas and electricity and essential food, drink and running costs. Then include a margin for entertainment and personalised treats. What’s left can be saved towards Christmas extras.
- Plan your Christmas spending well ahead of time, set limits for Christmas presents, parties, for decorations and anything else you can think of – and stick to them. If you feel you will need to borrow more money to make this a happy Christmas, then calculate whether you’ll be able to afford the repayment schedules over time. If the answer is no, then cut back on your spending. Diamond earrings, the latest Xbox 360 and a bottle of Champagne really are not necessary – they’re an aspiration. Your friends and family will be just as pleased with a more affordable alternative. After all it’s the thought that counts and not how much you spent.
Initial Credit Report Program
- Read through your credit report carefully to ensure that it’s up-to-date and accurately reflects your circumstances. A single clerical error could ruin your chances of keeping the credit limits you might have or of opening any new accounts, so if you find something you disagree with you should contact the relevant financial lender and ask for it to be amended.
- Never skip agreed repayments with financial providers to free money for Christmas. A missed repayment remains on your credit report for at least three years, cautioning lenders that you may not be trustworthy. You will pay a steep price later, in the shape of higher rates of interest or being turned down for credit you really need.
- If you are looking at getting interest-free credit for furniture, white goods or electronics ready for family celebrations, don’t submit an application for several deals within a couple weeks or months. Every application leaves a record on your credit report and whenever lenders see a lot of them in a fairly short time, combined with other information this could show that you’re desperate for money or perhaps that deception is being attempted. Stick to the essentials for now and console yourself with the thought that things will be lower priced in the New Year sales anyway.
- Find the section on financial associations in your credit report. It lists anyone with whom you share a financial connection, such as a mortgage. When you apply for a credit card, loan a mortgage through a finance lender they can also look at the credit report of anyone financially linked with you, as their situation could affect what you can do to honour the deal. If you have separated with a former partner – business or personal – you should always reallocate any debt and close the account(s), then ask the credit reference agencies to break the connection relating to your credit report, or you will suffer should they get into financial trouble later in life.
Advanced Credit Report Programme
- Now you’re ready to work on improving your credit report. One simple exercise is registering to vote at your current address. Lenders make use of the electoral roll as a precaution against fraud, to confirm that you live where you say you do. If they don’t find you, you could be asked for additional evidence of identity or even get refused.
- Look out for old or unused accounts that you can do without. Lenders take into consideration the financing you’ve previously been granted whether or not you’re using it, so it could be time to say good-bye to that just-in-case store card.
- Ask to add a note of explanation to your credit report if unforeseeable events, such as a health problem, explain past difficulties with making repayments. Lenders will see this and may take it into account in the future. You could also set up direct debits that will stop you from missing repayments in the future.
- Give yourself a Christmas present by discovering how your new financial regime has improved your credit report status. By carrying out a trial of CreditExpert, you can order your Experian Credit Report for only £5.95 per month after your trial period. Your credit report will not be the same as a credit score calculated by a lender as each finance lender uses their own unique formula. Your credit report will show the impact your credit history has on your chances of getting the finance deals you want. The higher your score, the greater your chances are to get a “Yes” – and enjoy a pleasant Christmas and prosperous New Year.
Maintenance Credit Report Programme
- Make regular checks on your credit report to check your progress and protect yourself against ID fraud – one of the 21st century’s fastest growing crimes. This happens when a criminal gets hold of enough personal data to impersonate you, max out your accounts and take a loan using your name. Look out for unfamiliar applications, new accounts you didn’t open, incorrect forwarding addresses or sudden increases in outstanding balances and follow-up right away with all the relevant financial lenders. It’s free to see your Experian credit report during a 30-day trail of CreditExpert and you’ll also be alerted by text or e-mail if there is a substantial alteration to your credit report that could indicate identity fraud.
You can join the discussion below by leaving your experiences about checking your credit report before spending or borrowing money for Christmas presents.