Whenever you apply for credit, the lender will check your credit report before making a decision. So what do you need to look out for to help them decide in your favour?
All three credit reference agencies: Equifax, Experian and Callcredit, only hold facts about people, they cannot blacklist anyone. Different lenders may use different information to make a decision about you, dependant on their specific lending criteria. Bad credit loans for example will have different rules compared to a high street loan.
So what information does your credit report hold?
Your personal details
The first section of your credit report contains your name, address and date of birth. It will also have any other names you might be known by (for example your maiden name), any other addresses you have lived at in the last six years and any other people you have made a joint application with (for example a spouse). It will also show any court judgements, bankruptcies and voluntary arrangements. If any of this information is incorrect, you should contact the credit reference agency.
- If your report shows that you are not on the electoral roll at your current address, it could have a negative effect on any credit application. You can improve your credit rating by contacting your local authority and completing a registration form.
- If a court judgement appears as unpaid and you have already paid it, if you live in England or Wales, you should contact the court concerned. Once they know the judgment has been settled, they will inform the credit reference agencies. If you live in Scotland, you will need to contact Registry Trust Ltd with a receipt or letter from the person you paid, along with a cheque for £4 to cover their search fee.
Credit account information
All of the UK’s major lenders share the details of their customers’ credit agreements through one or more of the three credit reference agencies. This information belongs to the lenders who provided it and is updated every month. The credit reference agencies can’t change any of the details supplied without the lenders’ permission.
Every credit account includes a list of status codes for the last six years, which show whether your accounts are settled, up to date, overdrawn, late or in default, meaning you broke the credit agreement and it has been cancelled. It will also show if the lender has sold the debt to a third party, has agreed to vary payments or a debt management programme, believes you have moved without providing a new address or believes you have died. If any of this information is incorrect, you should contact the lender in question.
- If an account is not being used and nothing is owed, you can improve your credit rating by closing the account. This is because lenders may look at the amount of credit you have available, as well as the amount you’re currently using.
- If you don’t recognise an account, you should contact the lender directly. It may be that you have a store card or credit agreement with a store that is managed by a separate company.
- Some credit store cards also provide extra information about how you manage your account. This can include your monthly balance, the amount repaid each month and the number and value of any cash advances.
A previous search, or footprint, shows that a lender has looked at your report to check your identity or credit history. These can show unusual credit activity, such as a number of applications in a short time, and can help identify attempted fraud. Records of previous searches are kept on file for 12 months, and can only be removed with the permission of the company that made it.
Having too many previous searches on your file could deter lenders from approving your application, so check to make sure you recognise all of them. If you don’t think a search record is correct, you should contact the lender in question.
- Sometimes a company will do a search that isn’t for lending purposes. This called an ‘unrecorded enquiry’ and won’t affect your credit rating as it can only be seen by the company that made the search. It is only recorded for your reference.
- Shopping around for the best deal shouldn’t leave lots of searches on your file. If you only ask for a quote then the lender should only do a ‘quotation search’. These won’t affect your credit rating because lenders know they aren’t full applications for credit.
- A financial associate search happens when someone you have a joint account with applies for other credit. The report will show that your information was only used in relation to an associate and won’t affect your credit report. However, if you’re no longer connected to that person, you should contact the credit reference agency to let them know. Their credit record could impact on your future applications.
The Gone Away Information Network (GAIN) shares information about debtors who have moved without giving a new address. This includes the address the customer was last known at and any other address the customer has been recorded at since.
If you think any GAIN information on your report is wrong, contact the lender who provided it and ask them to update their credit reference agencies. Alternatively, get in touch with the credit reference agency and they can contact the lender for you.
CIFAS is the UK’s fraud prevention service. It was developed to detect and prevent fraud and to help stop people’s names, addresses or other details being used by fraudsters to get goods and services such as credit.
A CIFAS warning on your file doesn’t mean that you have been accused of fraud. It could mean that others have tried to use your personal information, however, so lenders will take extra precautions such as contacting you to ensure your application is genuine.
Notices of correction
These are short explanatory notes of up to 200 words that you can attach to any entry on your file to explain the circumstances surrounding the status. They are visible to any lender searching your file.
You can add these to your credit report by visiting the credit reference agency’s website or writing to them, quoting the entry reference number and the text you want to attach. You can’t add a statement that is unjustified, defamatory or libellous.
Contacting the credit reference agencies
Credit File Advice Service,
PO Box 1140,
Consumer Help Service,
PO Box 8000,
Consumer Services Team,
PO Box 491,