RECESSION means cheap credit has become as scarce as a steak and kidney pie in Nicole Richie’s fridge.

For those looking to remortgage or cut existing debt’s costs, this can be a nightmare. Yet there is a chink of light: boosting your credit score can mean better deals and better rates.

Take out a loan, mortgage,credit card, contract mobile phone or even monthly car insurance and the company you are dealing with scores you, to see if they want to take you on.

This maps you against its perfect customer wish list, to see how closely you match that profile.

It’s crucial to understand that this is about profit, not risk. Even if someone has a good credit history, they may be turned down if the bank thinks it won’t make money from them.

Yet the system differs from lender to lender and product to product, so just because one company rejects you, it doesn’t automatically mean another will.

The credit rating myth Now it’s crucial to clear up a big myth. Credit ‘ratings’ and ‘blacklists’ DON’T exist.

You DO NOT have a universal credit rating.Nor is there a credit blacklist.

If you’ve been turned down by more than one lender,it might not feel like it.

While each lender scores differently,the inform ation used is the same,and often priorities are similar.

What banks know about you The banks get their inform ation about you from three areas: your application form details (so make sure you fill it in accurately!);any previous dealings you’ve had with them: and from the files held by the three credit reference agencies.

These are Experian, Equifax and Callcredit.

These three compile information, allowing them to send data on any individual to prospective lenders.

This data comes from the electoral roll, county court judgments and data shared by the financial institutions.

And what they don’t know .

The agencies hold an enormous amount of financial data, but not everything.

For example,records do not list motoring fines,details of savings accounts or your medical or criminal history.Inform ation from the Child Support A gency or about any student loans you may have.

If you missed any payments on a loan over than six years ago,that won’t appear on your file either.

Check your credit files for free It’s crucial to check your files regularly; at least every 18 months.

File errors or even fraudulent applications can cause massive problems, so you have to monitor them.

You’ve a statutory right under the Consumer Credit Act 1974 to write and get your files.This costs £2 per agency.

If possible,check all three agencies.There are also loopholes allowing you to check instantly online for FREE.

Just sign up to a credit monitoring trial, download the info and cancel.

For full guide to that, what to check and a free credit boosting tool go to www.

moneysavingexpert.

com/creditrating and manage your credit score.

Once you know what lenders see, you’re in a better position to improve their opinion.

Don’t use credit repair agencies that promise to improve credit ‘ratings’ for a fee,as there’s nothing they can legally do that you can’t do yourself free.

As each lender scores differently, there are no hard and fast rules, but the following should help:

  • Get on the electoral roll.If you’re not it, it’s unlikely you’ll get any credit. If you’re ineligible to vote, perhaps because you are a foreign national, then send all the credit reference agencies proof of residency. Ask them to add a note to verify this.
  • Lots of applications for credit in a short space of time hurts your score, so space out applications, not just for credit but for car insurance, mobile phones and others.
  • Moving house also disrupts scores. Make important applications pre-moving.

Plus you’ll score better when you’re earning, so if you’re about to take time off, go on maternity leave or suspect redundancy, apply beforehand.

  • Always try to follow at least the minimum repayment plan for your financial products. Even if you’re struggling, don’t default or miss payments. Doing this once or twice will cause problems lasting years.
  • Marriage doesn’t hurt, joint finances do. If one partner has a poor history, don’t get a joint bank account or mortgage, and it should maintain access to good credit for the other.
  • Evidence of stability is good, so homeowners rather than renters and those who are employed rather than self-employed, tend to score more highly. Putting a landline, rather than a mobile number, on application forms can help with security checks and improve your chances.

Having the same employer, bank and current address for a while all help too.

  • The nightmare scenario to avoid is a rejection spiral where you get repeatedly rejected because of an error, get it corrected, then get rejected because of all the searches rather than the error. So if you’re rejected once, immediately check the files are correct, otherwise you may mess up your score for an age.
  • Cancel unused credit cards and debts. Access to too much credit, even if it isn’t used, can be a problem.

Though if you’ve a bank account with a good history, keeping that open’s usually useful.

  • And a final thought. Though it m ay be tempting, lying on your application form doesn’t help.

Firstly it’s an offence, but also if lenders can’t corroborate your information it’s normally not used for credit scoring any way.

Building and repairing your credit history.

As credit scoring works by behavioural prediction, if you’ve no history, they can’t predict so you’re likely to be rejected. Therefore you need to try and build a good credit history.

If you can’t get credit, one solution is apply for hideous 30%-ish rate credit cards offered by the likes of Barclaycard Initial, Capital One Classic, Monument, Aquacard and Vanquis.

Then use these for six to 12 months, spending a little every month.

But there is a vital golden rule.

Strictly repay EVERY month, in FULL, so there’s no interest cost.

If you get turned down for those, there is a last resort prepay card as a solution, but you need to be careful with it, full info at www.moneysavingexpert.

com/creditrating