The number of application fraud cases filed on the CIFAS database increased from 62,000 in 2004 to 77,000 in 2007, an increase of more than 24 percent. In each of these cases, people told “material falsehoods” on application forms or supplied false or altered documents to support them. The lies most frequently told included trying to conceal a poor credit history or exaggerating the length of time resident at a particular address in the belief that stability increases creditworthiness.

Verification checks often unearth such “little white lies”. But there are also more serious ramifications. At the very least, having your application refused could, in itself, work against your credit score. “Lenders look at the number of searches conducted by consumers as part of the credit assessment process and a number of searches in a short space of time would impact on a consumer’s score,” says Neil Munroe, external affairs director at credit reference agency Equifax. “But more significantly, if a lender felt the information provided could be deemed as fraud and decided to prosecute, this would show on an individual’s credit file and could seriously affect their ability to get credit in the future.”

People who have missed payments on previous credit agreements are advised to explain these to any new potential lender. A “notice of correction” service run by credit reference agencies give the facility to provide an explanation of circumstances that might adversely affect your ability to obtain credit on your credit file. There are other ways, too, to try and improve your rating:

* Make sure you are registered on the Electoral Roll — this is an essential way for lenders to verify an applicant’s identity and prevent ID fraud;

* Be aware of searches on your credit file when shopping around and how it can affect your credit rating;

* Close old credit card accounts — even if they show a zero balance lenders will look at the potential credit available when assessing applications;

* Aim to pay off more than the minimum each month otherwise it could take years to pay off debts and you will incur huge amounts of interest;

* Set up Direct Debit payments for loan repayments to avoid costly late payment charges.

And above all exercise honesty. In this case, it really is the best policy.