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Credit checks

A credit check is a report which is compiled from past financial commitments and applications. This information is then held to create a picture as to how you have conducted yourself on past and present financial commitments.

What Is A Financial Commitment?

Financial commitments are Loans, Mortgages, Credit Cards and Mail Order Catalogues etc. Basically, any type of credit which you make payments for and all this information would be available on a credit report.

In the UK when you apply for a financial product the company to which you apply will often run credit checks, though there are companies which run no credit checks. They will advise you if this is required and will request your permission to go ahead. Once they have the report they will be able to see details such as:-

* The address you are currently registered as living at, this is in accordance with the Voters Roll.
* Your financial history.
* An idea of the type of credit you have, if this is not clearly stated then usually it can be established by the term and amount of your financial commitment.
* Your payment and balance details.

Payment details may appear in the following format:-

Latest Payment 000000100000043210000000 Oldest Payment.
'0' represents a made payment
'1' represents a missed payment
And '4321' represents 4 missed payments, the 0 that follows the 4 indicates that after falling 4 payments behind the account was then brought back up to date.
It also shows that there was only 1 missed payment in the last 12 months.
Finally the £127.00 indicates the current outstanding balance of that particular item of credit.
Be aware that moving house does not erase your credit history, it is connected directly to you, not your property.

Credit Ratings

Credit Ratings are a different matter, as every financial company "Rates" in a different way. Quite often this depends on the type of credit that company actually provides and as a result there isn't really such a thing as Your Credit Rating.

The main things to keep in mind are:-

* Keep you payments up to date as it may affect your acceptance of credit in the future.
* Keep your address up to date as this may cause a delay in acceptance if on a credit reference agency show you registered at a different address.
* You may think that if you haven't ever taken out credit that you would easily be accepted for credit. This is not the case as if you have never taken anything on credit then there is no record as to how well you can manage a Loan, Credit Card or Mortgage. This may seem crazy but it is how credit works.

If you are concerned as to your credit record you can request a report from companies such as Experian and Equifax. There will be a charge but at least this will put your mind at rest when applying for credit and this will also confirm if a past settled loan or item of credit has been removed from your credit history and also confirm if you are a victim of identity fraud. This can be requested as frequently as you would like and you can even register with Credit Expert which is part of Experian and will give you unlimited access to your Credit Record, however for this service you will usually need to pay a monthly or annual subscription.

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