Credit Report – Separating fact from fiction.

credit reference agencies sorting fact from fiction

What is my credit report?

Think of your credit report as your financial CV. It contains information that helps lenders confirm your identity and decide whether you’re a reliable borrower.

This includes details of credit accounts you’ve held (and whether or not you’ve kept up with repayments). Applications for credit you have made (whether successful or not).

Your current and previous addresses, and any financial connections. For example, the name of the person you share a joint account with. 

Who compiles the information?

There are three major credit references agencies in the UK.  Experian, Equifax and TransUnion.  It’s likely the information that appears on each of the agencies records is slightly different.  This is because lenders don’t always report in to all three credit reference agencies.

Why should I check my report?

  • Mistakes happen. 

  • Records held by lenders may be incorrect. 

  • You may believe an account has been closed and yet a very small balance remains unpaid.  If you have moved or the balance is so small the lender may not pursue BUT your report is showing that you are behind on the payment.

  • Understanding your financial standing will help you get the best credit deal.   This could potentially save you hundreds or even thousands of pounds.

  • You’ll be able to spot any fraudulent applications that have been made in your name.

  • It’s free!  There are paid services such as Experian’s CreditExpert, Clearscore and Noddle provide a free monthly report. Both will ping you an email if there are upcoming changes to your report during the month.

Credit reports: What information is included?

Information held in your credit report will come from banks, building societies and credit card companies. Mobile phone contracts, insurance companies, and hire purchase agreements.  Including those you have borrowed from in the past and currently have accounts with. 

Other information will be included from publicly available sources (such as the electoral register). Or utility companies.

Your name, date of birth, addresses, previous addresses, and whether you are on the electoral role at your current address. 

The starting balance, how much you currently owe and the repayment history.  This will include any late payments, missed payments and if you have exceeded a credit limit. 

It will detail any County Court Judgements (CCJs) made against you.  If your home has been repossessed or if you have moved away owing money.  Any arrangements to restructure your existing credit agreements due to financial problems. And if you then stick to that agreement.  Being declared bankrupt or entering into an Individual Voluntary Arrangement (IVA) will also be included.

Any CIFAS flags.  CIFAS (Credit Industry Fraud Avoidance Scheme) flags may be placed on your account if you have previously been the victim of identity theft. 

This will mean lenders will take extra care to ensure they are dealing with you and not someone pretending to be you.  This will protect you. But it may mean providing extra identity or answering more questions before lenders will proceed with your application.

CIFAS flags can also be used to warn lenders if a person is known to have made a false application in the past.  Lying about previous address history or date of birth in an attempt to hide debt problems for example.

What information is excluded from a credit report?

Your credit report will not show any credit balance on your current account or savings account.  Any stocks or shares you may hold, or pension pot information.

Student loans are not reported to credit reference agencies.  Council tax arrears, driving or parking fines, criminal records or medical history will never appear in your credit report.

How do I correct a mistake?

If you spot a mistake on any of your credit files, it’s important to get this rectified – otherwise it could harm your ability to get credit later. Mistakes can range from basic errors relating to your address details to incorrect information supplied by your bank. This could deter another company from lending to you.

You may even come across fraudulent activity, such as a credit application made in your name.

If you do spot a mistake, you can contact the company that provided the information or the credit reference agency itself to get it corrected. The agency has 28 days from your request to tell you if it has removed the entry, amended it, or taken no action.

The entry will be marked as ‘disputed’ in the meantime. This is so any lender searching your file will know not to rely on that piece of information.

If the credit reference agency doesn’t amend your records, you can add what’s known as a ‘notice of correction’ (up to 200 words) to your file. This can be used to explain why you think a piece of information is wrong or to highlight any mitigating circumstances.

For example, a sudden bereavement that may have caused you to miss a credit card or loan repayment.  Whilst this won’t change your credit score it may allow a future lender to make an informed decision in the future.

I have had money problems in the past and now I think I am on a blacklist. – Fiction

There is no such thing as a credit blacklist.  There’s no single ‘score’ that lenders use when deciding whether to let people borrow. Instead, lenders each use their own criteria to assess how risky a customer you’re likely to be.

This means it’s possible that while one lender will reject you for a credit card or loan, another might accept you.  Or offer you a different rate of interest depending on your credit history.

You’re more likely to get credit if you have never borrowed. – Fiction

When assessing your application, lenders look for evidence that you’ll be able to pay back what you borrow, so not having any record of successful repayments can count against you. Even if you’re in great financial health.

If you’ve never used credit, and this is preventing you obtaining it now, you might wish to consider applying for a credit-builder credit card. These cards are specifically tailored to help people build their credit rating.

You credit report details any missed payments indefinitely – Fiction

Account information will remain on your report for up to six years after the account has settled or defaulted.  It’s worth remembering that lenders are likely to be interested in current financial data.  A credit report showing 1 late credit card payment 5 years ago and since then all payments are made on time is unlikely be a concern. 

Similarly, someone who has needed to reduce their repayments for 12 months after losing a job but stuck to a repayment plan and now cleared the debt is a much better financial risk than someone who moved from their address and left debts behind.

Checking your report will damage your credit rating – Fiction

Making multiple credit applications will impact your credit rating as it may appear you are desperate for finance.  You will never be penalised for checking your own report.  So you’re free to look at any version as much as you like.

In fact, it’s a very good idea to check your report on a regular basis. If there are any mistakes, for example, this could lead to you being unnecessarily rejected outright or paying over the odds to borrow. Checking your credit report can also alert you to any fraudulent activity. It’s wise to check your credit report before applying for a credit card or mortgage.

I live with someone who has poor credit, so I won’t get a loan – Fiction (sort of?)

Your credit rating is only affected by those you live with IF you share a financial connection.  For example, you have a joint mortgage.  Being financially linked to someone may mean lenders look at their credit report as well as yours, as their circumstances could affect your ability to repay.

All credit agencies hold the same information. – Fiction

Lenders should share information with all three credit reference agencies (typically on a monthly cycle) but it’s likely there’ll be three slightly different ‘versions’ of your credit report.

This is largely because the amount of personal data in a credit report is growing, with companies starting to share information about customer payment habits but not necessarily to all agencies.

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