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What Information Can Help Your Credit Rating

How Fraud Can Affect Your Credit Rating

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When lenders search your credit reference file, they may find a warning against your name if someone has used your financial or personal details in a fraudulent way. For example, there may be a warning if someone has used your name to apply for credit or forged your signature.

There might also be a warning against your name if you have done something fraudulent.

To be able to see this warning, the lender must be a member of CIFAS. This is a fraud prevention service used by financial companies and public authorities to share information about fraudulent activity. CIFAS is not a credit reference agency. The information it provides is only used to prevent fraud and not to make lending decisions.

If there is a warning against your name, it means that the lender needs to carry out further checks before agreeing your application. This may include asking you to provide extra evidence of your identity to confirm who you are. Although this may delay your application and cause you inconvenience, it is done to ensure that you don’t end up being chased for money you don’t owe.

Build Your Credit File

Opening new accounts that will be reported to the major credit bureausmost major lenders and card issuers report to all threeis an important first step in building your credit file. You can’t start laying down a good track record as a borrower until there are accounts in your name, so having at least several open and active credit accounts can be helpful.

These could include or secured cards if you’re starting out or have a low scoreor a great rewards credit card with no annual fee if you’re trying to improve an established good score. Getting added as an on someone else’s credit card can also help, assuming they use the card responsibly.

Additionally, you can sign up for Experian Boost to add positive utility, cellphone and streaming service payments to your Experian credit report. These on-time payments wouldn’t otherwise be added to your credit report, but using Boost means they’ll be factored into your Experian credit scores.

Rbi To Discuss Policies With Credit Rating Agencies And Trade Bodies On 26 March

Reserve Bank of India governor Shaktikanta Das will hold pre-policy meeting with credit rating agencies and trade bodies on 26 March 2019. The pre-policy consultation meeting is set to take place in Mumbai. The aim of the meeting is to discuss interest rate and steps to boost economic activities. The meeting will focus on discussing the consultation process before the next financial year’s first MPC meet that is scheduled to take place on 4 April 2019. Along with the credit rating agencies and representatives of the trade bodies, the meeting will have representatives of the All India Bank Depositors’ Association. The RBI governor has been meeting bankers, credit rating agencies, industry chambers, non-banking financial companies , bankers, and government representatives to obtain their views on different aspects of the economy and the measures they expect from the central bank.

Last week, RBI governor expressed concerns over credit rating agenciesâ inability to assess credit risk and take timely rating actions. Credit rating agencies have come under the scanner post the IL& FS debt fraud.

18 March 2019

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Limit The Number Of Hard Inquiries

There are two kinds of inquiries that can be performed- a hard and a soft inquiry. A soft inquiry is when you check your own credit. When potential employer looks through your credit, or if any checks are carried out by financial institutions , these are called soft inquiries. Soft inquiries do not affect your credit score.

A hard inquiry is what happens when you apply for a credit card, or a loan. Hard inquiries that take place once in a while will not affect your credit score.

However, many of these within a short time span will affect your credit score. Banks will take this to mean that you require money because you have a facing financial problem.

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Each time you apply for credit, an inquiry appears on your credit report, regardless of whether you’re approved or denied. This can temporarily lower your credit score by roughly five points, though it will bounce back in a few months. While one credit inquiry isn’t likely to hurt your score, it can add up if you apply for multiple cards within a short period of time.

If you want a new card, but you’re not sure you’ll qualify, you can submit a pre-qualification form online. You can submit as many pre-qualification forms as you want, as they won’t impact your credit score.

For anyone looking to open a new card to take advantage of a sign-on bonus, make sure you space out your applications for new cards. There’s arguably no such thing as too many credit cards, but it’s not wise to apply for several cards within a short period of time it sends a message to issuers that you might be a credit risk.

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What Information Is Kept By Credit Reference Agencies

Credit reference agencies are companies which are allowed to collect and keep information about consumers’ borrowing and financial behaviour. When you apply for credit or a loan, you sign an application form which gives the lender permission to check the information on your . Lenders use this information to make decisions about whether or not to lend to you. If a lender refuses you credit after checking your credit reference file they must tell you why credit has been refused and give you the details of the credit reference agency they used.

There are three credit reference agencies – Experian, Equifax and TransUnion. All the credit reference agencies keep information about you and a lender can consult one or more of them when making a decision.

The credit reference agencies keep the following information:

If there has been any fraud against you, for example if someone has used your identity, there may be a marker against your name to protect you. You will be able to see this on your credit file.

Factors That Affect Your Ability To Get A Credit Card

Credit card issuers will also look at other factors besides your credit score when reviewing your application. One of the most important considerations is your income whether or not it is a steady source of income that is sufficient to pay back your debt. Card providers will also consider how you have utilized previous credit accounts. Even with a good credit score, it is still possible for your credit card application to be denied if you have too much existing debt or limited credit history.

Additionally, lenders will consider an applicants credit history which provides a more holistic view of long term credit tendencies rather than just a single score or rating. includes detailed reports of whether previous debts have been paid in full and on time, and whether the debtor tends to keep a balance on their credit cards.

Usually, credit card providers prefer to offer credit to those who are employed full time. Students, retirees, part-time workers and self-employed workers may find that they are eligible for lower credit amounts and have limited options in regards to which credit card they qualify for.

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Request A Change To Your Credit Report

If you believe there is inaccurate, incomplete or out-of-date information inyour credit report, you have a right to apply to your lender and the CentralBank to amend the information held on the Central Credit Register.

You can get more information in the Central Banks factsheet Howto request an amendment to information on my credit report .

If you believe you have been impersonated by another person, you have theright to place a notice of suspected impersonation on your report.

Add a statement to your credit report

It is possible to add a personal statement to your credit record to clarifyit. This is known as an explanatory statement.

For example, if you have had significant expenses due to relationshipbreakdown, bereavement, illness or another cause, you may add these details toyour record.

The statement must be factual, relevant to the information in the creditreport, and under 200 words. It should not contain information that couldidentify another individual .

You can get more information in the Central Banks factsheet Placingan explanatory statement on my credit report .

The statement is added to your credit report and it can be viewed when yourdata is accessed. However, lenders do not have to take your statement intoaccount when assessing you for a loan.

Sign Up To Mse’s Credit Club Which Includes Your Experian Credit Report

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Our totally free Credit Club helps you keep a track of your credit record. You can here’s what it does:

You can get your full Experian Credit Report for FREE through Credit Club. See our full details on how this will work.

You’ll get a free Experian Credit Score. This will give you an indicator of how lenders see you when assessing you for credit applications.

Our unique affordability score. This clever tool will help you work out how much you can afford to borrow, using calculations based on your income and estimated spending.

Our unique Credit Hit Rate this will show you your chances of success, expressed as a percentage, of grabbing our top cards and loans.

Eligibility tool to show your best credit deals. It reveals the likelihood of you getting top credit cards or loans.

Wallet workout tool to check if youre on the best credit products for YOU.

Your credit profile explained. It shows the key factors affecting your score and how to improve them.

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A Few Final Safeguards

Bear in mind that the simpler your tax return, the less information there is for the IRS to question. Claiming the standard deduction instead of itemizing, for instance, eliminates a whole category of potential disputes. Then again, deductions and tax credits exist for your benefit. If you qualify, don’t hesitate to take advantage of these tools.

In the unlikely event you are audited, make sure you have the documents to support your case. If the audit ultimately finds you submitted an inaccurate tax return, you may be charged a 20% accuracy-related penalty on top of any additional money you owe. That penalty can climb if the IRS determines you made gross misstatements or committed fraud. Criminal charges may also result, but are uncommon.

How Credit Scores Are Calculated

Credit scores are determined by computer algorithms called scoring models that analyze one of your credit reports from Experian, TransUnion or Equifax. Scoring models may use different factors, or the same factors weighted differently, to determine a particular score. However, consumer credit scores generally share a few similarities:

  • Scores are calculated based on the information in one of your credit reports.
  • Scoring models try to predict the likelihood that a borrower will be 90 days late on a bill in the next 24 months.
  • A higher score indicates a person is less likely to fall behind on a bill, and vice versa.

The vast majority of lenders use credit scores calculated by FICO and VantageScore® scoring models. The most recent versions of their generic credit scores use a score range of 300 to 850and a score in the mid-600s or higher is often considered a good credit score. .

Considering how different credit scores use the same underlying information to try and predict the same outcome, it might not be surprising that the steps you take to try to improve one score can help increase all your credit scores.

For example, making on-time payments can help all your credit scores, while missing a payment will likely hurt all your scores. There are several factors that can affect your credit scores. Here, we’ll focus on the actions you can take to help improve your credit scores.

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How Do I Improve My Credit

Look at your free credit report. The report will tell you how to improve your credit history. Only you can improve your credit. No one else can fix information in your credit report that is not good, but is correct.

It takes time to improve your credit history. Here are some ways to help rebuild your credit.

  • Pay your bills by the date they are due. This is the most important thing you can do.
  • Lower the amount you owe, especially on your credit cards. Owing a lot of money hurts your credit history.
  • Do not get new credit cards if you do not need them. A lot of new credit hurts your credit history.
  • Do not close older credit cards. Having credit for a longer time helps your rating.

After six to nine months of this, check your credit report again. You can use one of your free reports from Annual Credit Report.

How You Will Know About A Cifas Warning

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If there is a CIFAS warning against your name you will be able to see this on your credit file. If you are an innocent victim of fraud, CIFAS members must also send you a letter telling you that there is a CIFAS warning against your name.

A CIFAS Member is not allowed to refuse an application or cancel a service you are getting, such as an overdraft agreement, just because there is a warning on your credit reference file. They must make further enquiries to confirm your personal details before making a decision.

You can get tips and useful information from CIFAS on how to avoid identity theft and what to do if you are a victim of it.

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Consent And Credit Checks

In general, you need to give permission, or your consent, for a business or individual to use your credit report.

In the following provinces a business or individual only needs to tell you that they are checking your credit report:

  • Prince Edward Island
  • Saskatchewan

Other provinces require written consent to check your credit report. When you sign an application for credit, you allow the lender to access your credit report. Your consent generally lets the lender use your credit report when you first apply for credit. They can also access your credit at any time afterward while your account is open.

In many cases, your consent also lets the lender share information about you with the credit bureaus. This is only the case if the lender approves your application.

Some provincial laws allow government representatives to see parts of your credit report without your consent. This includes judges and police.

What Information Is On The Central Creditregister

Loans for 500 or more are included on the Central Credit Register.

From June 2017, it includes:

  • Amount of next payment

Consent for a lender to check your credit history

When you apply for a loan, the lender must check the Central Credit Registerif the loan is for 2,000 or more.

Lenders can also check the Central Credit Register if the loan applicationis for under 2,000 or:

  • You have requested a re-structure of an existing loan
  • There are arrears on an existing loan or a breach of a limit on a credit card or overdraft

Your consent is not required for lenders to check the Central CreditRegister.

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What Is A Bad Credit Score

A bad credit score means you might find it more difficult to get credit. Thats because its an indication to lenders of problematic financial behaviour, such as a history of being late with, or entirely missing repayments.

The three CRAs each have a different number that they consider to be a bad credit score:

Experian below 721

  • 0 to 560 is considered very poor

  • 561 to 720, poor

TransUnion below 566

  • 0 to 550 is considered very poor

  • 551 to 565, poor

  • 604 to 627, good

  • 628 to 710, excellent

The key thing to remember is your credit score is a constantly changing thing that can modify with certain types of financial behaviour and can be improved.

If you’re in a lot of debt

If youre in real financial difficulty and in serious debt, improving your score should not be your priority – first you should get out of debt.

There is plenty of free, impartial help available to you from debt charities like StepChange. Theres no need to go it alone.

Tips For Credit Rebuilding

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Ironically, the only way to fix your credit score is to start borrowing money again. If you are in a consumer proposal, think carefully about the purpose of this process, and how to avoid new problems with your credit. Even though it feels good to be offered new credit, or be accepted for a new card, be sure not to overextend your ability to make regular payments. Go slowly. You do not need to borrow large amounts to rebuild your credit. Making all your payments on time is the key. In addition, pay attention to the interest rates and fees charged on credit products you apply for as there are some lenders who may not have your best interests in mind.

Here are some tips for rebuilding your credit.

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How To Rebuild Your Credit Rating In Canada:

If your credit rating has dropped, you can still get credit. Here are the best ways to rebuild your credit score.

First, lets assess where you are.

Can you still get credit? Or are you starting from scratch after a bankruptcy or financial crisis?

Some of our readers have declared bankruptcy or filed a consumer proposal and wont be approved for a credit card.

So, lets begin assuming you have zero or poor credit history and need to rebuild. Ill then give actions for people who have bad credit and are looking for ways to boost their rating.

Before you start make sure all your personal information is reporting correctly on your credit report. Just request a free credit report from each of the two credit reporting agencies, Equifax and TransUnion.

You get a free credit report once a year for no charge. You can call them as well to request a copy of your credit report by mail:

  • Equifax 1-800-465-7166
  • TransUnion 1-800-663-9980

Here are 11 things you can do to quickly rebuild your credit in Canada after bankruptcy, a consumer proposal, or a financial crisis where you had to stop paying bills and know your credit rating took a big hit.

These are based on my experience in the financial industry which includes showing thousands of clients how to rebuild their credit ratings in Canada.


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