Check it out

If you haven't done so recently, or at all, it is worth viewing your credit report. You can obtain this from a credit reference agency such as Experian, Equifax or Callcredit. Accessing a basic report can cost around £2, with more detailed records costing more. Equifax offers an instant report online for £11 and charges £15 for a more comprehensive profile, which includes information on how you are likely to score with a lender. Experian's online

CreditExpert service offers a free 30-day trial during which you can access your report as many times as you like and be alerted to any changes to it.

Neil Munro, external affairs director for Equifax, says consumers are becoming more aware of the need to check their credit records in the current climate. "People are waking up to the impact cedit reports can have on their ability to borrow and we are seeing more people looking at them. One positive effect of the credit crunch is that it is making people think about their finances more." Keeping tabs on your credit report is also a useful way of keeping tabs on possible fraudulent activity.

Ring the changes

Once you have viewed your report, you can start taking positive steps to improve it if it is less than glowing. Making payments on time and settling as many debts as possible is a good place to start, but checking the accuracy of the information is important too. If you find anything wrong, contact the credit reference agency and they will liaise with the relevantfinancial organisation to sort out the inaccuracy.

Check your personal information too

It is important to be on the electoral roll as a lot of lenders use this as a starting point for identifying you. If you've had or applied for joint credit with someone else at your address, your credit report will show them as a financial associate of yours. Your report won't show you their actual financial records but a lender can see them if you apply for credit. If the link no longer exists you should disassociate them from your reports. You can do this in writing or through a credit reference agency website.

You are allowed to justify blemishes on your report too. James Jones, consumer education manager for Experian, says: "If you have had a sudden change in your circumstances, such as being made redundant or getting
divorced, and it has affected your credit report, you can add a 200-word explanation to your file, known as a note of correction. Lenders will see this and take it into consideration during your application."

Jones says that Experian has an interactive 'score simulator' facility on its website where consumers can see how adjusting their behaviour would affect their credit report, an innovative tool that highlights the importance of being financially astute.

With lenders reining in their criteria, there has never been a more important time to be on top of your finances. Owen Roberts, head of Callcredit Consumer, says: "with the credit crunch and increasing incidences of identity fraud, it is a prime time to become financially aware. With the majority of people having more than a handful of credit commitments, it is important to take control of your finances. Regularly checking your credit report is an essential part of a healthy financial lifestyle."

So check your report today to ensure you have a clean bill of health.

What is a credit score?

A credit score is a mark you are given by a lender when it assesses your application for finance, be it a mortgage, a loan or a credit card. Taking your credit report into consideration, the organisation will also look at other information, such as your listing on the electoral roll and any previous bankruptcies or County Court Judgements.

Each lender has its own scoring model and they tend to keep the details of these secret, but they will attribute points for being in long-term employment, your marital status (being married and hence having another household income will score more highly), age (the older the better), number of children (the fewer the better) and how long you have held any current debt.

If lenders reject your application for credit, they are obliged to tell you why. It may be because of something in your credit report, or it may be because you don't fit their particular criteria. It could even be because you always make payments in full and on time, meaning that they are unlikely to make any money from you in interest charges.

Clean up your act

Improving a poor credit rating or maintaining a good one could make all the difference between having an application for finance approved or binned.

Bear the following tips in mind to keep your report clean:

- Check it
You can't keep on top of your credit profile if you don't know what it is, so make sure you check it at least annually.

- Fix it
If you find an error in your report, immediately write to the credit reference agency to ask for it to be corrected. If you don't get even minor mistaked changed, they could all count against you when a company uses your credit report to make a lending decision.

- Be on time
Always try and make your payments on time - even the smallest ones. If you think you are going to be unable to make a payment, contact your lender as soon as possible and ask them for advice on choosing the least damaging option.

- Home is where the heart is
Without being able to find you on the electoral roll, any company will struggle to make a credit decision about you, so make sure you register.

- Happy and settled
If you have fully paid a County Court Judgement or your bankruptcy has ended, make sure this is shown on your report.

- Honesty is always the best policy
Always complete applications for credit accurately and honestly. Lenders will be able to discover lies or half-truths easily and will decline such applications.

- Ready, aim, fire
Don't use a scattergun approach when applying for credit. Multiple applications to several lenders within a short period will show up on your credit profile and may lead to some lenders refusing you credit.