A recent event got me thinking about the importance of protecting your credit score as a property investor. I have some tips to share with you, but first the story….
My Brother’s £4K Mistake!
My brother Russell usually has a top credit score. But suddenly that changed. He went from the green zone right down to the orange zone on Experian. How did it happen? After some investigation, he found out he had a subscription for a mobile internet dongle with EE. All the EE services were meant to have moved over to the business account, but somehow EE missed this one. Russell had long since stopped using the dongle and forgot all about it. EE kept taking his subscription payments, adding up to £4000.
Russell later noticed that there was still a direct debit on his account for EE and cancelled it with the bank, because he assumed it was out of date due to the fact all EE services were meant to be going via the business account. EE didn’t contact him to seek payment, but they did put a big red mark on his credit file!
As a property investor having good credit is important for getting mortgages, so Russell took action fast. Eventually, the issue was resolved with EE and they removed the missed payment from Russell’s file (a big thank you to EE for sorting this out).
It’s got us both thinking about the lessons we could draw from this experience….
1. Diligently Check Through Your Banks Statements Every Month
It is easy to forget a gym membership, a subscription service that you no longer use or other monthly payment. It is important to check your bank statement carefully so that you can remove the things you no longer need. This will help you keep on top of your finances and avoid you missing any payments, which will harm your credit score.
That said, however, don’t just cancel the direct debit with the bank. If you cancel the direct debit with the bank without contacting the company, this can lead to the company trying to collect. When they are unable to do so, they may register the missed payment with credit reference agencies leading to your score being hit hard. So cancel with the company involved, not the bank.
2. Constantly Check Your Credit Report
There are three main credit reference agencies in the UK: Experian,TransUnion and Equifax. Checking your score with all three will ensure that you are aware of any changes to your score with each company. There are both free and paid ways to check your score with each company. The paid options will usually alert you to any changes as they happen. The free options will normally let you check your score each month.
You can find a list of both the free and the premium services here. You should check your credit score as often as possible, and ensure that nothing inaccurate is added to your files. Many of the services also include advice about how to improve your individual score, which can be extremely useful.
3. Talk To The Manager To Resolve Any Negative Payment Issues
If a company places a missed payment on your credit file and you feel they have done so unfairly, contact them and ask them to mark it as a mistake. The first customer service rep that you speak to probably will not have the power to do this, so ask to speak to the manager. If the manager is unwilling to help, speak to their boss and so on. If no one on the phone can help you ask about their complaints procedure. If your complaint is rejected, appeal the complaint.
As a property investor, a good credit score is extremely helpful, so putting in the effort can be worthwhile. Be polite, explain your issues and be persistent. Chances are, getting a mark on your credit score removed means more to you than removing it means to the company involved.
For more tips check out the top 10 ways to improve your credit score as a property investor.
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