3 Big Reasons You Should Care About Your Credit File

Do you take care of your credit file? You might have heard about your credit file, or you may not have a clue what it is. Your credit file is important. It’s essentially a footprint of your financial connections and movements. You should take time to consider it, as it could put you in good stead in the future.

Here are three big reasons you shouldn’t neglect that credit file:

#1 – You WILL need it one day and it is FREE

Some people think you only need to care about your credit file if you are planning on buying a house. In actual fact, it is not just house buying that you need a credit file for. Any bank account, personal loan, rent contract, or sometimes even employment contracts, require a credit check. The credit check will tell the person how responsible you are with money. You will need this at some point in your life, so it is best to keep it maintained as early as possible. It costs you nothing to do this.

So, bear in mind that you should always pay bills on time, try not to hit an unauthorised overdraft, and keep credit card debts to a minimum (always pay back in full on time each month!) This will help build a picture of your credit spending for when you need it in the future. Even having a mobile phone contract that is paid in full each month will show on your credit file and will help you. Finder.com suggests putting a utility account in your name. If you live with someone who has all of the household utility accounts in their name, see if you can transfer one of them into your name. Additionally, if you don't want a credit card, a personal overdraft could be an option as this also shows on your credit file. This small step can help build a better credit picture for you.

#2 It is an important part of personal financial admin

So you may be thinking that you don’t need to worry about your credit file because you live at home with your parents, you don’t need any credit, car finance, or anything similar. Your credit file is effectively blank. BUT – this is bad too. Having no credit file means you have no proof that you know how to manage your money. When it does come to the time that you want to move out, you have no credit file to help prove you can be responsible.

It is important to think of a credit file as personal admin and financial maintenance.

Like other day-to-day administration tasks, you should factor money management into your mind set. Instant loans provider Wonga set up a blog post explaining the details of a credit report in more detail, which we suggest you take a look at. You can also visit their Money Academy for more free help and advice to effectively manage your money. This should be a priority for you, even if you have no immediate financial plans. Wonga explains how important a credit file is to your financial future. Their useful blog explains how a credit file maps out your past financial choices to any potential lender, and so you should not dismiss it as being unnecessary. Working on your credit file little and often is the key.

#3 It helps with Identity Theft 

If a fraudster makes a credit application in your name, the lender will check your credit report before making a decision. This leaves a mark on your file that you can see. Having a credit file that you can check often is a good way of identifying whether you are an identity theft victim. See a name you don’t recognise? Report it!