'Tis the season to be almost bankrupt

Neil Baker reports on ways to restore a good credit rating

Spare a thought this festive season for less fortunate people who will not be able to enjoy the traditional activities of credit-fuelled generosity, binge spending and conspicuous consumption - the people with bad credit ratings.

Doing a "proper" Christmas is now such an expensive business that for many people the most important ingredient is not goodwill, smiling children or snow - it's plastic.

A bad credit rating can be a real sickener, but the start of a new year is a good time to sort out any debts and get the slate wiped clean.

When you make any application for credit, the lender will usually do a score check. Information on the application form, such as how much money you earn or how long you have been in your job, is used to work out how easy it will be for you to repay the money. You could pass this test with flying colours, but most lenders will also ask a credit reference agency to check your application.

Even if your financial position makes you a good credit risk, reference agencies hold information going back several years. If you have had a bad experience with credit in the past, the lender may decide not to make any credit available.

Credit reference agencies must let you see your file if you ask. Some of the information is culled from public sources. But reference agencies also hold information which many people would regard as confidential. Whenever you take out a loan or other credit, the agreement you sign will state that the lender has the right to inform a reference agency if you default on the agreement.

Default does not just mean that you didn't pay off the money owed. One of the big two UK agencies, CCN, can know whether you have had an unauthorised overdraft or whether any cheques or direct debits have bounced. It will know whether you have been late with any loan repayments and, if so, how late and how often.

CCN keeps information about country court judgements (CCJs) and bankruptcy on your file for six years. Information on loans or accounts is held for six years if they are active and three years if they are closed.

It is possible to have your slate wiped clean. "Credit repair" agencies offer to have CCJs removed from your credit file for a fee. But beware - last year the Consumer Association reported concerns that some of them acted illegally.

More than 1 million CCJs are registered each year for non-payment of debts and, according to the Consumers Association, there are three genuine reasons for having a CCJ set aside: it was registered in error; your defence, which should have been heard at the time, was not considered; or the amount was paid in full within a month. If you feel that any of those applies in your case, you should contact the court which gave the judgement. Default notices on your credit file can be removed if you apply to the lender which put the notice there - they can tell the credit reference agency to remove the information. They might be prepared to do this if payments have been brought up to date, if you have come to an arrangement to pay, or if you are in dispute over the credit agreement.

For a copy of a "No Credit?" leaflet call the OFT on 0181-957 5058. If you have problems with debts, there is an OFT leaflet called "Debt". The National Debtline phone number is 0121-359 8501 and the Consumer Counselling Service is on 0345 697301.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Life and Style
fashion
News
videoJapanese prepare for the afterlife by testing out coffins
Arts and Entertainment
Harrison Ford attends Blade Runner at Target Presents AFI's Night at the Movies at ArcLight Cinemas on 24 April, 2013 in Hollywood, California
film... but Ridley Scott won't direct
Sport
Hughes is hit by a bouncer from Sean Abbott
cricketStephen Brenkley on batsman's tragic flaw that led to critical injury
Sport
Dejected England players applaud the fans following their team's 3-0 defeat
football

News
people

Actress isn't a fan of Ed Miliband

Life and Style
Stefan Gates with some mince flies
food + drink
Arts and Entertainment
Rooney Mara plays a white Tiger Lily in forthcoming film Pan
filmFirst look at Rooney Mara in Pan
Life and Style
Customers browse through Vinyl Junkies record shop in Berwick Street, Soho, London
tech
Life and Style
health

Do you qualify – and how do you get it?

Life and Style
tech
Finacial products from our partners
Property search
Sarah Bibby and Robert Allinson, with their children Charlotte and Ethan, confronted the ‘difficult’ questions’ posed by making a will

Simon Read: There may be trouble ahead for cohabiting couples who don’t make a will

Your children have it all, your partner gets nothing

Halfords is gearing up for Christmas

Bargain Hunter: Find the deals that have real value beneath the Black Friday hype

Halfords is gearing up for Christmas

Fields of dreams: venture capital trusts help young companies to grow, potentially delivering big returns for investors

Mark Dampier: You take a chance but VCTs have sorted the wheat from the chaff

Fields of dreams: venture capital trusts help young companies to grow, potentially delivering big returns for investors 

The FCA has imposed £1.1bn in fines on five banks over forex trading practices

Simon Read: Catch 22 for borrowers who are turned down by banks

There are many reasons for people to turn to high-cost credit, but being turned down by their banks for a loan is one

The battle between the banks to attract more current account customers moved up a level this week when Yorkshire Bank (and Clydesdale Bank) launched a market- leading £150 switching incentive.

Money Insider: Would £150 make you switch banks?

The £150 incentive from Yorkshire and Clydesdale runs from now until 28 February next year, but you must use the official Current Account Switching Service (CASS) and close your existing account to qualify

The short slope that takes women all the way down to living on the streets

For the rising number of homeless women, the struggle is compounded by health problems and by losing their children

If you’ve got a card in your wallet that charges a low standard interest rate, there’s less financial impact if you can’t repay your full statement balance.

Money Insider: Save money with the right credit card

Research from Sainsbury’s Bank Credit Cards this week revealed that 15 per cent of people making a large purchase on their plastic didn’t use one with 0 per cent interest on purchases

Last week was hangover time, when Stock Spirits, a vodka producer, distilled a profit warning that sent its shares crashing more than 25 per cent. (image: Rex Features)

No Pain No Gain: Vodka causes a hangover as shares in Stock Spirits slump

Last week was hangover time, when Stock Spirits, a vodka producer, distilled a profit warning that sent its shares crashing more than 25 per cent

Investment melting pot: the price of gold may have fallen but Artemis Strategic Assets believes its value cannot be debased

Mark Dampier: Strong returns can be found if you go the opposite way to the crowds

Investment melting pot: the price of gold may have fallen but Artemis Strategic Assets believes its value cannot be debased

The Bank of England announced that interest rates will stay at 0.5 per cent

Simon Read: Banks can’t blame the economy for their low rates

Interest rates are currently as low as 0.1 per cent

The schemes work by using collective power to negotiate better deals with gas and electricity suppliers

Simon Read: Don’t blow a fuse with your energy supplier, just switch

The energy watchdog Ofgem has slammed Scottish Power, while Citizens Advice reports a string of complaints about it

John Lush from Hampshire got into debt with payday lenders and had the help of a debt management charity to clear the £20,000 he owed

Simon Read: The only place for debt is out in the open, don't be afraid to ask for advice

John Lush from Hampshire got into debt with payday lenders and had the help of a debt management adviser to clear the £20,000 he owed

Seven Families campaign aims to raise awareness of financial damage caused by illness or disability

The campaign is handing financial help to seven families for a year, along with support and advice in how to get their careers back on track
The 10th birthday of broadband in Britain was marked with a projection in 2010. But the infrastructure is still being rolled out

Families pay the price of superfast broadband

Bills are going up for households around the UK as providers invest in better infrastructure. Emma Lunn explains why - and what to do

How to cut the cost of car insurance: A five-step guide to getting a better deal

Premiums are on the rise again but motorists don't have to take a back seat on the price of their cover, says Rob Griffin
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

    h2 Recruit Ltd: Business Development Manager - HRO - £70k+ ote

    £35000 - £450000 per annum + £3k car, £70k ote: h2 Recruit Ltd: Do you want to...

    Citifocus Ltd: Newly Qualified Accountants - Risk Mgmt

    £Attractive Package: Citifocus Ltd: Prestigious financial institution seeks to...

    Citifocus Ltd: Operational Risk Analyst

    £Negotiable: Citifocus Ltd: Experienced operational risk professional with ban...

    h2 Recruit Ltd: Business Development - Telecommunications - £50,000 OTE

    £25000 per annum + £50,000 OTE: h2 Recruit Ltd: London, Reading , Southend, Al...

    Day In a Page

    Homeless Veterans Christmas Appeal: Drifting and forgotten - turning lives around for ex-soldiers

    Homeless Veterans Christmas Appeal: Turning lives around for ex-soldiers

    Our partner charities help veterans on the brink – and get them back on their feet
    Putin’s far-right ambition: Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU

    Putin’s far-right ambition

    Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU
    Tove Jansson's Moominland: What was the inspiration for Finland's most famous family?

    Escape to Moominland

    What was the inspiration for Finland's most famous family?
    Nightclubbing with Richard Young: The story behind his latest book of celebrity photographs

    24-Hour party person

    Photographer Richard Young has been snapping celebrities at play for 40 years. As his latest book is released, he reveals that it wasn’t all fun and games
    Michelle Obama's school dinners: America’s children have a message for the First Lady

    A taste for rebellion

    US children have started an online protest against Michelle Obama’s drive for healthy school meals by posting photos of their lunches
    Colouring books for adults: How the French are going crazy for Crayolas

    Colouring books for adults

    How the French are going crazy for Crayolas
    Jack Thorne's play 'Hope': What would you do as a local politician faced with an impossible choice of cuts?

    What would you do as a local politician faced with an impossible choice of cuts?

    Playwright Jack Thorne's latest work 'Hope' poses the question to audiences
    Ed Harcourt on Romeo Beckham and life as a court composer at Burberry

    Call me Ed Mozart

    Paloma Faith, Lana del Ray... Romeo Beckham. Ed Harcourt has proved that he can write for them all. But it took a personal crisis to turn him from indie star to writer-for-hire
    10 best stocking fillers for foodies

    Festive treats: 10 best stocking fillers for foodies

    From boozy milk to wasabi, give the food-lover in your life some extra-special, unusual treats to wake up to on Christmas morning
    Phil Hughes head injury: He had one weakness – it has come back to haunt him

    Phil Hughes had one weakness – it has come back to haunt him

    Prolific opener had world at his feet until Harmison and Flintoff bounced him
    'I have an age of attraction that starts as low as four': How do you deal with a paedophile who has never committed a crime?

    'I am a paedophile'

    Is our approach to sex offenders helping to create more victims?
    How bad do you have to be to lose a Home Office contract?

    How bad do you have to be to lose a Home Office contract?

    Serco given Yarl’s Wood immigration contract despite ‘vast failings’
    Green Party on the march in Bristol: From a lost deposit to victory

    From a lost deposit to victory

    Green Party on the march in Bristol
    Putting the grot right into Santa's grotto

    Winter blunderlands

    Putting the grot into grotto
    'It just came to us, why not do it naked?' London's first nude free runner captured in breathtaking images across capital

    'It just came to us, why not do it naked?'

    London's first nude free runner captured in breathtaking images across capital