Many people do not understand what their credit report is, what it contains or even if they can have access to it. A credit report contains key information about your credit history, which lenders use in association with your application details to assess how much of a risk you are, and if they lend to you will you pay back in full any credit. In the current economic environment, lenders are very keen to avoid bad debt, so have become even more cautious about who they lend to.
Credit Reports are important because depending on their content, they can cost or save you money. If they contain negative factors, or are incorrect, then you will find it hard to obtain credit in the first place, and if you do obtain credit, it will be at higher interest rates.
Credit Reports are created and updated by the UK three main credit reference agencies, which include Experian, Equifax and TransUnion. These are marketed as free credit reports.
When you apply for something, your credit file can be checked with your permission, credit checks can be made when you apply to rent a house, store credit, apply for a job, apply for a finance product such as car finance, loans, mortgages, credit cards etc, so your credit report impacts all parts of your life!
The top myths surrounding credit reports:
- Individuals can access their credit report (not just lenders and financial institutions) through partner and credit reference agency websites.
- There is only 3 credit reports and scores in the UK – There is lots of websites providing credit reports and score but these are all based one one ore more from the UK credit reference agencies, Experian, Equifax and TransUnion.
- Nothing is Free – It used to be that free credit reports direct from the Credit Reference Agencies (Experian, Equifax and TransUnion) were actually first month free credit reports, with recurring monthly payments after the first month. Now it is more complicated the biggest credit reference agency – Experian provides it’s credit scores for free but monthly credit reports are paid for, Equifax and TransUnion credit reports and scores can be accessed free via partners (Clearscore or Totally Money for example). All three credit reports and scores can be accessed via
- There is no blacklist of consumers, who should be refused credit.
- Individuals do not have one credit score or rating, lenders work out your score every time you apply for credit or finance. These score can differ between different products, you are applying for, for example credit cards versus loans. Lenders understand the profile of an excellent customer and use your application details and credit report to mark you against this.
- Looking at your credit report, does not count as a search or footprint on your credit history.
- The credit reference agency does not dictate whether you are accepted or not for a credit application, the company you are applying to makes the decision.
- In an application it is not just the credit report content, which is considered, the lender also looks at your application details and any accounts you already have with them (like a current account if a bank).
- Your credit report, does not contain details including, salary information, employment status, criminal records, employer details, any savings accounts you have.
- Only the lender can tell you why your application was rejected not the credit reference agency.
- Financial information on people who lived at your address previously cannot impact you with your applications.
- Credit Repair companies cannot do anything consumers cannot do themselves,. You cannot pay to remove negative sections of your credit file. Credit Repair companies often make false claims such as being able to remove county court judgments from your credit file (they stay on file for six years unless the person pays the full amount owed within one month of the judgement being issued.
- Not all my credit agreements are included in my credit report – not all lenders and organisations share their information with credit reference agencies.
- Rent is not included in my credit report – mortgage payments are, rent is not unless you use a service like Experian’s score booster which securely takes your other payments (rent as an example) from your current accounts to improve your credit score.
Your credit report does contain the following key information:
- Public Information including your Electoral Roll address, County Court Judgements, Bankruptcies, IVA’s (individual voluntary arrangements).
- Searches on your credit file, for example which lenders may have checked your credit history when you applied for credit.
- Reposessions
- Credit Account Information – Including credit you have up and running, total outstanding amount, if payments are made on time, if credit arrangement are settled.
- CIFAS – Identity fraud notes, where companies will update if an individual has been a victim of identity fraud.
- GAIN – Shared details on consumers who have moved without letting companies they owe money to know.
- Financial Associations – for example those linked to you via joint current accounts or mortgages.
