It's vital to stay on top of your credit report if you want lenders to view you in a positive light and accept any applications.
Whether you’re looking to take out a mortgage or a credit card, or need a clean credit report for a job application, an unresolved mistake in your history could set you back.
If your credit history has been affected by an error, even when it’s not your fault, your rating will likely be lowered. However, it’s easily possible to put it right and get your finances back on track.
Incorrect information on your credit report: how does it happen?
Your credit record is updated once a month by credit scoring agencies such as Callcredit, Equifax and Experian. When you’ve had an issue with a payment – even if through no fault of your own – it will stay on your report for four to six weeks, until the next update point. If a lender accesses your report halfway through that period, they’ll see the incorrect information. This can affect whether or not they decide to give you credit, along with the terms of a loan such as how much and the repayment period length.
The most common issues likely to raise a red flag with lenders include:
- A missed bill payment
- A late credit card repayment
- A County Court Judgment (CCJ)
- Exceeding an agreed overdraft
It could be that a simple mistake has caused the issue, such as a service provider failing to record that you’ve paid your bill on time, or a banking app crashing partway through a transaction. Whatever the error, it will still show up on your credit report, so it’s important to get it corrected as soon as possible. There are more serious issues that can lead to incorrect information on a credit report too, like credit card fraud, which a credit agency may not be aware of, even if your bank is.
While your credit score will improve over time if you don’t have any more issues and continue to pay all your bills on time, incorrect information will stay on your credit report. It can therefore have a long-term impact on your score and affect future credit applications.
Disputing your credit report
It’s important to monitor your credit report so that you can spot and put right any issues as soon as possible after they appear on your credit history. If you see something that’s incorrect, you should contact the provider (your bank, mobile phone provider or utilities company for example) to discuss the issue in the first instance, and as soon as possible.
You’ll need all the evidence to hand to be able to properly argue your case. For example, if you’ve been charged for exceeding your overdraft but don’t think you did, check your statements for any suspicious or unexpected transactions before calling your bank.
The bank will either agree with you and amend their records (they’ll also send a notice of the error to credit reference agencies) or they’ll stand by their decision. In this case you’ll need to contact the credit reference agencies yourself to ask them to investigate your claim. They’ll add a note to the report recording that the issue is under question, which will be visible to lenders even before it has been resolved. You’ll also have the option of adding a statement of up to 200 words linked to the item, outlining your case if the dispute goes unresolved, which is visible when someone looks at your credit report. This is known as a notice of correction, which lenders can take into account when making a decision on whether to lend to you or not.
If your challenge is upheld, the issue will be removed from your credit report. As your report is only updated once a month, it could take 28 days before your credit report gets back to where it should be. It’s also worth checking with other credit reference agencies, to make sure their reports don’t include the same mistakes.
How to prevent errors on your credit report
So, while credit reference agencies do their best to give an accurate picture of your financial situation, mistakes can happen and have a detrimental effect if left unchecked. It’s up to you to make sure your credit record is accurate and up to date. Regularly check it so that when you do want to take out a new credit card, buy a car or get a mortgage, lenders see you in the best possible light.
Want more tips on how to keep your credit history healthy? Check out the Know How blog here.