Keep your credit rating safe over the hols

Too much online shopping could result in black marks against your name, thanks to anti-fraud measures

In the rush to snap up the right gift, you could be damaging your credit rating.

Or if you're tempted to splash out in the post-Christmas sales, you could fall foul of new fraud prevention tactics by online stores.

Buying presents online can mean triggering a credit check, which will leave a footprint on your file. The more credit checks that are recorded, the more of a risk you will be perceived to be and one or two footprints can quickly become seen as a black mark.

Lenders will simply presume you've been trying to get lots of credit and be much more likely to turn you down for a loan.

The practice could cause problems down the line with you either being turned down for credit, or charged a much higher rate of interest by lenders which use risk-based pricing.

The country's fifth most popular retail website, Next.co.uk, admitted last week that it carries out credit checks on new customers. Industry insiders suggest the firm isn't alone, with many other online retailers beginning to adopt the practice.

The problem is fraud. With more than 32 million of us shopping online in the past year, according to the UK Cards Association, fraud is growing at a massive rate.

It's forcing more and more online shops to introduce even greater prevention methods to fight the growing army of fraudsters.

For crooks who get access to someone else's credit card details, for instance, it's fairly simple to go online and order goods to be delivered to a preplanned fake address, often with instructions to leave items under a bush or even by the front door. By the time the lender or cardholder has spotted that a fraudulent transaction has taken place, the thieves will have picked up their goods and be long gone.

Doing a credit check when a potential fraudster comes to a site will throw up the fact that the delivery address is different from the address registered for the credit card. In most cases, the retailer will then turn down the purchase, thwarting the fraudster's actions. But the practice can also catch innocent spenders out.

"Doing a full credit check on someone as a means of preventing fraud is absolutely insane," says James Daley, the editor of Which? Money. "The over-the-top action can leave people struggling to get credit at a decent price in the future."

Lenders use different methods to work out our credit scores, but a high number of credit checks will be a red alert for all. Keeping to tried and trusted retailers should be one way to avoid triggering new credit checks. Firms that you've already used will have your details on file with no need for further checking. And don't be tempted to apply for new credit deals to pay for Christmas presents or New Year bargains.

Many retailers offer interest-free credit which can look attractive but turn into a nightmare if you're turned down. Anecdotal evidence suggests that unscrupulous shops offer interest-free deals with little intention of giving it, hoping instead that you will be embarrassed into taking expensive in-store credit.

They will care little about the black mark left on your credit file. "With Christmas being an expensive time of year, people may feel the need to pay for it on credit," says Gill Wrigley, the debt solutions director at RSM Tenon. "If someone has applied for numerous credit cards to pay for the festive season, that can affect their credit rating, especially if any of the applications have been declined."

Ms Wrigley's advice to those worried about damaging their credit rating is stark. "Spend within your means," she says. "Your credit score also depends on whether or not you pay your bills on time. Therefore, another good way to make sure you don't affect your credit rating is to make sure you pay all your bills within a reasonable time frame."

If you're a victim it could also hit your credit rating. If there are fraudulent transactions on your account they could end up on your file. Once they've been identified as fraudulent, your bank or card provider should make your losses good. But if there is a delay in things being sorted out and you haven't paid the bill in the belief that it will be repaid by your lender, a note could be sent to your credit file. These are sent every time you miss a payment or are late in repaying bills as they show that you can sometimes be unreliable. Two or more such notes will make lenders think again about giving you credit in the future. If you are a fraud victim, ask your bank to make sure a default note is not sent to your credit file.

Neil Munroe, the external affairs director for Equifax, suggests that setting a budget is the best way to avoid getting into trouble paying bills, which would have a negative affect on a credit rating.

"People need to ensure that they will be able to afford to pay back any credit they may use over Christmas," he says. "One late payment, if it is just one late payment on just one account, should not impact too much on someone's ability to get credit in the future. However, if a history of late payments starts to build up over various accounts held, this could affect their credit rating. In the past few years, lenders have tightened their criteria for extending credit. They will be looking for signs that an individual may struggle to repay new credit. In some cases, even one late payment may have an effect on the deal offered."

Kevin Mountford, the head of banking and credit cards at Moneysupermaket.com, says that the first thing to do is to check your file. "You have a vested interested in keeping your details up to date," he points out. "If there is anything wrong, it is up to you to correct it, and keep it right."

He suggests keeping a regular check, say once a year, and ensuring your profile is fairly stable. "Such things as staying with a bank for a fair amount of time boost your rating, so don't switch all the time."

For that reason, if you switch accounts for a better deal, it's an idea to keep the old account open if you plan to apply for credit. Being with the same bank for 20 years will suggest you're a lot more reliable to a credit provider than if you've been there only a matter of months.

Records

How to check your credit rating

There are three credit reference agencies: Callcredit, Equifax and Experian. For £2 they must send you details of your full statutory credit report. Check all three as they may hold different information – and any of it could be incorrect. You can apply online or by post, but you'll need to provide your name and any past names, date of birth and details of all the addresses you've lived at over the past six years, and any people you have financial associations with, such as a shared bank account or mortgage.

Check your file carefully. If you spot a mistake, write to the credit agency concerned and ask for it to be corrected immediately Explain why it's wrong, and include any evidence you have. The agency has 28 days to act, and the relevant detail in your credit report should be marked as "disputed" in the meantime. If the agency doesn't amend your records, you have a legal right to send it a notice of correction (up to 200 words), which will be added to your file.

Callcredit: 0113 242 4747

callcredit.co.uk

Equifax 0844 335 0550

equifax.co.uk

Experian 0844 481 8000

experian.co.uk

Sport
tennisLive: Follow all the updates from Melbourne as Murray faces Czech Tomas Berdych in the semi-final
Arts and Entertainment
'The Archers' has an audience of about five million
radioA growing number of listeners are voicing their discontent; so loudly that even the BBC's director-general seems worried
Arts and Entertainment
Henry VIII played by Damien Lewis
tvReview: Scheming queens-in-waiting, tangled lines of succession and men of lowly birth rising to power – sound familiar?
Arts and Entertainment
Taylor Swift is applying to trademark song lyrics from 1989
musicYou'll have to ask Taylor Swift first
PROMOTED VIDEO
News
Joel Grey, now 82, won several awards for his role in Cabaret
people
Sport
Harry Kane celebrates scoring the opening goal for Spurs
footballLive: All the latest transfer news as deadline day looms
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Compliance Assistant

    £13000 per annum: Recruitment Genius: This Pension Specialist was established ...

    Ashdown Group: Market Research Executive

    £23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

    Recruitment Genius: Technical Report Writer

    £25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

    MBDA UK Ltd: Indirect Procurement Category Manager

    Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...

    Day In a Page

    Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

    Isis stands strong as its numerous enemies fail to find a common plan to defeat it

    The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
    Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

    Virtual reality: Seeing is believing

    Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
    Homeless Veterans appeal: MP says Coalition ‘not doing enough’

    Homeless Veterans appeal

    MP says Coalition ‘not doing enough’ to help
    Larry David, Steve Coogan and other comedians share stories of depression in new documentary

    Comedians share stories of depression

    The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
    Has The Archers lost the plot with it's spicy storylines?

    Has The Archers lost the plot?

    A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
    English Heritage adds 14 post-war office buildings to its protected lists

    14 office buildings added to protected lists

    Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
    Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

    Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

    Scientists unearthed the cranial fragments from Manot Cave in West Galilee
    World War Z author Max Brooks honours WW1's Harlem Hellfighters in new graphic novel

    Max Brooks honours Harlem Hellfighters

    The author talks about race, legacy and his Will Smith film option to Tim Walker
    Why the league system no longer measures up

    League system no longer measures up

    Jon Coles, former head of standards at the Department of Education, used to be in charge of school performance rankings. He explains how he would reform the system
    Valentine's Day cards: 5 best online card shops

    Don't leave it to the petrol station: The best online card shops for Valentine's Day

    Can't find a card you like on the high street? Try one of these sites for individual, personalised options, whatever your taste
    Diego Costa: Devil in blue who upsets defences is a reminder of what Liverpool have lost

    Devil in blue Costa is a reminder of what Liverpool have lost

    The Reds are desperately missing Luis Suarez, says Ian Herbert
    Ashley Giles: 'I'll watch England – but not as a fan'

    Ashley Giles: 'I'll watch England – but not as a fan'

    Former one-day coach says he will ‘observe’ their World Cup games – but ‘won’t be jumping up and down’
    Greece elections: In times like these, the EU has far more dangerous adversaries than Syriza

    Greece elections

    In times like these, the EU has far more dangerous adversaries than Syriza, says Patrick Cockburn
    Holocaust Memorial Day: Nazi victims remembered as spectre of prejudice reappears

    Holocaust Memorial Day

    Nazi victims remembered as spectre of prejudice reappears over Europe
    Fortitude and the Arctic attraction: Our fascination with the last great wilderness

    Magnetic north

    The Arctic has always exerted a pull, from Greek myth to new thriller Fortitude. Gerard Gilbert considers what's behind our fascination with the last great wilderness