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Credit check your finances

Credit check your finances

Category: Debt

Updated: 16/11/2015
First Published: 15/01/2014

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

We're two weeks into 2014 and hopefully you've already started to look at your finances for the year ahead, but what about your credit commitments? It's vital to stay on top of things to make sure you don't end up paying more than you need to, but it's perhaps even more important to give yourself a regular credit check.

Keeping tabs on your level of credit as well as your score could mean the difference between securing a market-leading rate and being lumbered with one that eats away at your money, and if you don't occasionally check your credit rating you could even be denied future credit altogether. So, we've put together a few steps to help give your finances a thorough credit check and get sorted for the year ahead.

Step one: Check your credit score

The first thing to do is check your credit score so you know your current financial footing. There are a number of companies that can do this – take a look at our table of credit check providers – many of which will offer a free trial, after which a monthly fee will usually be payable in order to get regular access to your credit report.

Most services will simply need a few personal details to generate your report, after which they'll be able to provide a thorough overview of your credit history and resulting credit score. This score will determine the likelihood of being eligible for credit in the future as well as the rates you're likely to be offered, so taking a proper look at your report can be a great way to not only know where you currently stand but to also find areas you need to focus on.

Step two: Rebuild your credit rating

If your credit rating is less than perfect, you'll need to start rebuilding it if you want access to the best rates in the future. Luckily there are plenty of ways you can do that – start by making sure you're on the electoral roll then close down any credit accounts you no longer need, and if you've maxed out your available credit you'll want to focus on ways to start making higher repayments to show lenders you're not a credit risk (our guide to improving your credit score gives a more detailed overview of the additional steps you can take).

Step three: Transfer to a 0% deal

If you've got credit cards, are paying high rates of interest and have built up a decent credit score, you might want to consider transferring your balance to a card that offers 0% interest. There's an abundance of cards offering 0% balance transfer deals at the moment, some offering cardholders up to 30 months interest-free, and with relatively small balance transfer fees all your money will go towards paying off your balance.

Of course, you still need to make sure you choose wisely, so here's a quick checklist to help you find the right deal for you:

  • First of all, be confident that you'll be accepted before applying – being declined could affect your credit score
  • Make sure you know exactly what you owe on your current cards
  • Work out how much you can afford to repay each month and try to find a balance transfer deal to suit
  • Make sure you'll be able to repay the amount in full by the time the interest-free period ends
  • Don't always go for the longest balance transfer deal if you won't need the extra time to pay it off, as these cards often have higher fees
  • Remember that you normally won't be able to transfer balances between cards of the same banking group
  • Set up a direct debit to pay off at least the minimum amount each month – miss a payment and your interest-free deal could be withdrawn

Step four: Consider consolidating

If you've got a large amount of debt from several lenders and your repayments are becoming unmanageable, consider consolidating everything in a single loan. Doing so can help things become a lot more manageable – you'll only have one payment to make each month, will be dealing with one lender and one interest rate – and with personal loans having a set time period you'll have a clear route out of debt.

There are a lot of great rates available at the moment too, particularly for mid-tier borrowing (between £7,000 and £15,000), so if you've got a decent credit rating it's worth seeing the type of deals you can uncover.

Remember, in order to secure a mortgage, credit card or personal loan you need to have a good credit rating. To find out if yours has a clean bill of health, contact a credit check provider, such as Experian CreditExpert to investigate your credit report.

What Next?

Compare credit check providers

Check out our guide on how to improve your credit score

Compare 0% balance transfer deals

Use our loan calculator to find one that suits your needs

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.