The Importance of Checking Our Own Credit Files
Blacklists as such don’t exist. Most companies will do a credit file check via a credit reference agency to look at our credit file. And much of what is contained in that file will determine whether we will get the credit we are after, be it a loan, something on hire purchase, or perhaps a credit card. Bad debts will harm our chances of getting more credit. And, what comes up when our credit file is checked will determine not only whether we will get the credit, but also on what terms it will be offered. In other words, the higher the risk, the higher the interest will usually be charged. Unfortunately, it is often those who can least afford it who end up paying the most for their credit. Credit card companies who are prepared to give cards to individuals with a bad credit history charge much more for their cards, and those people who don’t pay their balances off each month get charged interest of course. Interest rates can be as high as 40% APR, which is twice the average. If they then pay just the minimum payment they will then pay even more over the time. The charges can be horrendous. Avoiding the requirements of some loan companies from having to fill in lengthy application forms is possible. Payday loans, for example, are an easy and speedy way to get smaller amounts of cash, handy in an emergency. These loans usually range anywhere from £250 to £1,500. ‘Payday loans’ are called that because generally they are short term loans offered to individuals that have an occupation, and need a loan before their payday arrives. The loan usually has to be paid back in full when the individual receives their salary, although there is usually a 30 day period to make the payment. Applicants can apply online. A standard requirement is the person wanting a payday loan has to be in regular employment, often with a 6 month work history, and must have a bank account. But, here again, credit does not come cheap. The APR can be as high as 2,500%. Of course it never works out having to pay that over a full 12 months because of the short term nature of these loans. But if they were taken out for a year, say, the interest repaid would be horrific. High risk equals high interest. So, keeping a close watch on our credit files is important in order to spot any activities which may indicate fraudulent activity on our accounts. It also ensures we spot any inaccuracies, such as payments made to our creditors but not showing as paid. We do not want any prospective creditors to penalize us because of reading something in our file that is not true. By law we can, for a small fee, request our credit files from any of the credit reference agencies. They should correct any errors we report to them too.
