The most recent information on your credit file has the most impact, but your credit history for the last six years is still on record and will be checked. If your credit report shows a few missed payments, you might be charged higher interest by lenders or might not be eligible for some loans. This is because lenders will consider you a higher risk to lend to.

Your credit history can sometimes affect applications for  insurance and mobile phone contracts.

Checking your report is a good idea because it can help you spot any fraudulent activity or mistakes on your report, it might even remind you to pay a bill.

There are three main credit scoring agencies in the UK, they each provide free online access to your credit file:

• Equifax - Clearscore

• Experian - MSE CRedit Club

• TransUnion (formerly Call Credit) - Noddle
  
  

You can request your full credit file free or simply get your score online,. The main difference between the full credit file and online versions are that the credit file versions let you have a paper copy sent to your address, while the other is only available online, although you can print the information yourself.

Each Credit Reference Agency also offers enhanced chargeable services, you should think carefully whether you really need these services as this is another cost added to your budget when you are able to access adequate information for free.

The Credit Reference Agencies agreed with the UK Government to supply free credit reports to consumers to help prevent fraud, but are they really free? 

Although online credit reports are free to sign up for and access, you will see targeted adverts for financial products that would suit your current credit score. The credit reference agency or the credit score provider, such as MSE Credit Club is very likely to earn a commission if you make a successful application for the advertised product. This is know as an affiliate programme. It is a common way to earn income and is common among the shopping comparison sites that you come across, like Money Saving Supermarket and Uswitch. 

The presence of an affiliate programme might not bother you and of course it helps to fund free access to services that you might ordinarily have to pay for, but you should still spend time shopping around for the best deal.

Not only do the different lenders have their own standards for rating credit scores but the Credit Reference Agencies use different scoring systems too. 

When you access your online report, you will see what the ratings mean as these will be explained.

Examples of a good credit score with:

• TransUnion is scoring 4 out of 5

• Equifax is scoring over 420 out of 700

• Experian is scoring over 880 out of 999.

Some lenders do not check any credit reference agency information to make their lending decisions, while others have additional criteria they use. These factors mean that a good credit score does not guarantee a borrowing application will be successful or that a bad credit score means you will not be able to borrow any money.

If you have a low credit rating, there are several things you can do to try to to improve your score:

Register on the electoral roll

If your name is not on there, you will find it much harder to get credit.

You can register to vote online or by post.

County Court Judgements (CCJs)

Having a court judgements for debt has a serious impact on your credit score. If you are struggling to pay your CCJ you can apply to vary the judgment.

High levels of existing debt

Paying debt off can help. If your total borrowing looks like you are maxed out, lenders are unlikely to lend you more, unless you are looking to re-organise your debts. However, it is worth bearing in mind that some lenders might score you lower when they see a history of paying borrowing off early as this might look like unmanageable debt being juggled.

Check for mistakes on your file 

Even having just a slightly wrong address can have an impact on your score. So, make sure you check all the details and report any incorrect information immediately.

Pay your bills on time

Paying on time a phone landline or internet contract is a great way to prove to lenders that you’re capable of managing finances effectively.

Check if you are linked to another person  

If you have a spouse, friend or family member’s credit rating linked to yours through a joint account it could affect your personal rating if they have a poor score. You can remove a financial association but only usually if there is no joint borrowing.

Check for fraudulent activity 

If something recorded on your credit report is incorrect or does not apply to you, i.e. if someone applied for credit in your name without your knowledge, contact the credit reference agency immediately to have your file updated.

Moving home a lot

Lenders are more comfortable when they see evidence that you have lived at one address for a considerable period. Although you need to bear this in mind, of course it is often beyond your control as a private renter.

If you’re struggling to improve your score, you could sign up to a one-month free trial membership with one of the credit reference agencies but you need to make sure you know the cancellation terms to prevent ongoing charges if you only want the free trial period.

Your credit history is built up slowly over time depending on your financial applications and behaviours.

The longer a  bill goes unpaid, the greater the likely impact on your credit score. Keep checking your credit score to help keep a track. Most negative scoring will remain on your file for at least six years. After 6 years, everything is deleted from your file, including missed payments, defaults, bankruptcy and CCJs.

If you have a poor credit history, you might want to consider getting a credit-builder credit card. These cards are specifically offered to people with low credit scores

Features

• card credit limits are often low

• interest rates are higher than standard credit cards

• some cards have a monthly subscription fee.

When you use these cards and pay off bills each month, you can prove you are creditworthy, increase your credit score, and apply for other cards and loans when your credit rating improves.

You need to consider the fact that you will be paying high interest rates and make sure this will not put you into debt and make your credit rating worse.

You might see enticing adverts from firms that claim to repair your credit rating for a charge. Most only advise you on how to obtain your credit file and improve your credit rating but you can do this yourself for free.

Some firms claim that they can do things that is not  legally possible  or even encourage you to lie to the credit reference agencies. You should avoid these firms.

If you have been a victim of fraud, you might see a CIFAS marker called a ‘Victim of impersonation’ notice. Having this on your file serves as a warning to future lenders that you have been a victim, or are vulnerable to becoming a victim, of fraud.

A CIFAS marker is put on your file by a lender who felt there had been an attempt at fraud using your identity. They are legally obliged to report this. The marker will stay on your file for 13 months.

Having a CIFAS marker does not affect your credit score and does not  stop you from taking out credit. It might however, cause some issues if you apply for credit that is processed automatically, like online loans. This is because your file would need to be reviewed and checked manually.