They've raised the bar if you're after a loan

In the midst of a banking crisis, your credit score is king. As loans become harder to obtain and more expensive, consumers can't afford a record of missed repayments or unpaid bills on the files held by the credit reference agencies. A low score will make it tough to secure an advance for a car or house. A high one, on the other hand, could be a passport to the little cheap credit that is still available.

Lapse on a card or mortgage repayment, or worse still default on a loan, and it is clear people will be damaging their credit ratings. However, your score can take a hit in lots of other, more subtle ways – some of which are far from apparent at first glance. For after years of devil-may-care lending practices, banks are now monitoring customers for any indication of financial stress, ready to cut lines of credit if they judge it necessary to protect their bottom lines from the scourge of bad debts.

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"With the tightening of credit, factors that may have been ignored before now represent early signs of stress of a person who can't pay credit," says Neil Munroe from credit reference agency Equifax.

Simple things like forgetting to pay your mobile phone or monthly catalogue bill can catch up with you as firms report back to the agencies. These black marks will then be inserted on your credit files.

Many people aren't aware of the long-term implications of their financial behaviour, says Darryl Bowman from Experian, another of the UK's three big reference agencies along with Callcredit. "Whenever you apply for credit, you want to make yourself look more attractive to banks. They are still lending money but they are only lending to people they can be sure will pay it back.

"With catalogue or mobile phone companies, it's easy to sign a credit agreement [without really realising it]," he says. "Fail to keep up repayments and it will affect your ability to get much bigger credit, such as a mortgage, later on."

People can take a number of practical steps to prevent their score from deteriorating, says Beccy Bowden Wilks from the debt charity National Debtline. "If you use a credit card on a monthly basis, pay off in full and build up a good credit history. If you don't use your cards often, ask that the spending limits be reduced – or alternatively cut them up and cancel them. Anything that involves credit will have a bearing on your score."

Even if you have a credit or store card that you no longer use, it will still show up on your file. This is important because potential lenders will see you have a line of credit available and note the potential for getting into debt trouble further down the line.

Another way in which a credit score can be hit is if an individual applies for lots of different products that each entail a credit check being carried out, such as a mobile phone, cable or satellite television or even dealer finance for purchasing a new car. Each search will leave footprints on the file, and when lenders see them, alarm bells may sound. Generally, lots of different credit applications over a short period may be viewed as a possible sign of financial stress. This may not be enough in itself to lead to a credit application being rejected, but it could cause the provider to look even more closely at the applicant's circumstances.

Even canny borrowers who move between 0 per cent introductory deals on credit cards need to be wary of the impact on their scores. "Switching cards leaves a footprint," says Francis Walker from debt charity the Consumer Credit Counselling Service (CCCS). "It doesn't mean you have defaulted but it may look suspicious. However, non-payment of council tax and utilities bills has a bigger implication for your credit score."

The most serious transgressions on a credit file include having a county court judgment against you or being made bankrupt. These stay on file for six years and, in the current climate, they may well deal a fatal blow to your chances of being accepted for further loans or indeed any product that requires a credit check.

Despite some of the claims made by companies that offer to "repair" credit ratings, a CCJ can't be removed from your records unless it is proved it was put there by mistake. Credit reference agencies allow people to include personal statements in their file, setting out mitigating circumstances for a CCJ or a bankruptcy. What's more, settlement of any outstanding debt can be noted in the records, which may ultimately make lenders look more kindly on an application.

All in all, the advice from debt charities as the credit crunch tightens its grip is to try to stay on top of your file and not to forget the household bills.

The importance of setting the record straight: How a househunter dealt with the dangers in his credit file

As the banking crisis deepened last month and lending criteria grew tighter, Michael Oakes and his partner, Shaun Sparks, faced the daunting prospect of trying to get their hands on a £370,000 loan to buy their dream three-bed art deco house in south London.

Michael, 35, who works for Young Group, a wealth management firm, understood all too well how tricky things might prove. "It's a lot of money, and with the credit crunch on, lenders are being very careful. A colleague at work advised me to check out my credit record and see if there was anything I could do to boost the chances of the mortgage firm saying yes."

Michael and Shaun, 37, each downloaded their credit file through the website of reference agency Experian – a service that is currently available for free. Although there were no horrors, Michael saw one or two things that surprised him and could have counted against a successful application in the current climate. "I opened an Egg credit card eight years ago but had long since stopped using it. But because I hadn't closed the account, it was there on my file. The mortgage firm could have seen this and decided I was more of a risk because I had this line of credit available to me."

Potentially more damaging, Michael saw that there was also a "financial relationship" with an ex-partner sitting on his file.

"About five years ago I held a joint account with this person, and as a result I was deemed to have a financial relationship. The lender would have been perfectly entitled to look at that person's credit rating – who I am not with anymore – when deciding whether or not to loan me any cash in future. I would have had no control over this."

A quick call to Experian rectified this and the file no longer holds any mention of a financial relationship.

With their credit files updated, Michael and Shaun applied for a home loan and got it, completing on the property in just two weeks. "We're really happy with our new home. I don't know if what I did with the credit reports helped, but it certainly can't do any harm to stay on top of things."

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