Checking your credit rating is cheap and easy to do, and can help you save a small fortune as well as keeping your identity safe.
Fraudsters are nothing new, but the explosion of online activity over the past couple of decades has means there are more ways than ever for conmen to steal your ID.
By keeping an eye on your credit history, you can go a long way to keeping your identity safe, as well as making sure you qualify for the best financial products.
Whether you are applying for a loan, a credit card, a mobile-phone contract or a mortgage, lenders check your credit score to see if they want to do business with you, and on what terms.
This information includes all borrowing and lines of credit over the past six years, plus your electoral-roll status, details of any county court judgments and financial links with any third parties.
Missing the odd repayment deadline every few years probably won’t do too much harm to your credit score (although all lenders have their own criteria for deciding what’s important to them), but by checking your credit report once a year, you can make sure there isn’t any erroneous information on there that could work against you.
It’s easy to get a copy of your credit report. Just contact one of the three main credit-reference agencies – Equifax, Experian or Callcredit – and you’ll be sent your credit report for a fee of £2. (Sometimes you can get a free copy by signing up for a trial subscription to their services, but if you fail to cancel before the end of the trial period, you’ll be billed for the service.)
If you spot anything wrong on your credit report, you have the statutory right for the agency to put it right. Errors could involve a payment being wrongly logged as being late or a debt listed against you that actually belongs to a former partner.
And if anyone else has been trying to apply for credit in your name, that should be easy to spot, because all credit applications, successful or not, are listed on your report.
“It’s vital that people review their credit reports on a regular basis and tell us if they find any mistakes,” said James Jones, head of consumer affairs at Experian.
“We can then get to work setting the record straight before the information becomes a problem, such as a credit application being unfairly refused by a lender.
“We will quickly get to work on your behalf by contacting the lender. It’s important that existing or potential borrowers take steps to dealing with mistakes because not doing so could stop them getting the credit they deserve.”
Make sure you are on the electoral roll. If you aren’t listed, lenders will consider you higher risk.
Close down any lines of credit you no longer use, including redundant credit cards, old shopping-club accounts and overdrafts you no longer use.
Set up direct debits for the minimum monthly payments on any credit cards you have. If you meet all your monthly deadlines, this will improve your credit score.
Protect your online identity
Meanwhile, following a few basic steps when you go online will help cut the chance of your identity being used by fraudsters in the first place.
When you are asked to provide personal information to third parties, consider how much of it you really need to share. Signing up to an online forum, for example, should not require as much information as your bank needs about you.
Set your social media privacy settings to “high”.
Use different passwords for each of your online accounts. Experian recommends that each password should have at least 10 characters and should avoid words from the dictionary.