article: This could involve anything from a mortgage or loan, to applications for a credit card or a mobile phone contract. But, during tough economic times, lenders are being more choosy about who they lend money to. So, is there anything you can do to improve your credit rating? James Jones, from credit reference agency Experian, answers some of your questions. Q: I have a mortgage with Northern Rock. I am trying to transfer it to another lender to get a more favourable rate. I took out a loan with First National in February 2005. I made regular payments of Â£120 per month for more than four years up until June 2009. Due to a change in bank accounts and address I defaulted on that date. I settled the full amount of Â£7,202 in October 2009. I believe due to this default I am unable to get another lender. Please advise me what I should do to repair or improve my credit ratings. R Patel. A: Defaults stay on a credit report for six years from the default date, so I am afraid yours will hang around until June 2015. Do make sure you review your report to check the default has been updated to "satisfied". If you want to explain on your report why the default occurred you can send a "notice of correction" to each of the three credit reference agencies - Experian, Equifax and Callcredit. The negative impact that the default has on credit scoring will reduce over time and may eventually be outweighed by more recent positive repayment information. A reputable mortgage broker should be able to help you find a competitive deal based on your current circumstances. Q: I currently have a rating in the green (excellent) zone however it is towards the bottom end. As I have no debts, apart from a totally up-to-date mortgage, and have never been behind with credit card or council tax, why is my rating not higher? Ronald P Macleod. A: You do not actually have a credit rating at all. Each lender you approach for credit will calculate a rating for you based on the data available to them at the time and their own lending policies. You can get a score from each of the credit reference agencies to help you understand how your credit report is likely to be viewed by a typical lender, and you have clearly done this with one of the agencies. An excellent score is certainly good news for you but there is always room for improvement and the agency you obtained this score from should be able to give you some custom advice based on your actual data. Do not forget, there are three credit reference agencies and lenders will typically use just one or two, so it is certainly worth reviewing all three credit reports from time to time. Local authorities do not currently share council tax records with the agencies, so you will not find this on your report. Q: Companies are quick to report to the credit reference agencies when you
summary: Credit ratings are used by lenders when deciding whether to accept an application for credit.