Your Credit Report – It is one of the ways to achieve success
We all plan to have an excellent credit report as we all understand the importance to have a high credit scoring report. Your positive credit report is possibly the best second way to gain financial success, obviously, your own business acumen comes at first.
We do get confused by people talking about their credit reports. It is sometimes difficult to manage your debts and dealing with new credit applications at the same time.
Let us understand how you can get your credit report, what is there on your report, and can it be improved. Our objective is that you feel confident about dealing with your debts and enhance your financial capabilities.
Credit Reference Agencies manage your Credit Report
Everyone should take time to manage and boost their credit score. It’s no longer just about whether you can get mortgages, credit cards, and loans, it can also affect mobile phone contracts, monthly car insurance, bank accounts, renting a home, and other things.
Your credit report is a summary of your financial history provided by a credit reference agency (CRA). These organizations keep financial information about nearly every adult in the UK.
These agencies share information about people’s credit history to lenders such as banks, credit card companies, or mortgage providers, to help them decide whether they should lend money to you.
Credit Reference Agencies in the UK
There are three main agencies in the UK you can request your credit report from. In no particular order these are:
Free credit score access is available on their website full report free via the MSE Credit Club
Free access is available via ClearScore
Free access is available via Noddle
You’re also entitled to a statutory credit report copy of your basic credit report from each agency, it costs £2 where it is not provided free of charge. But I think the free credit report option is better now.
I recommend you to get your credit report from all three credit reference agencies as they may vary from each other but it will help you to find out if there are any issues that need correction or updating.
What does a credit report contain?
Your credit report contains a range of personal information, including:
- Your full name, current address, and date of birth
- Any other names you may have had previously (i.e. before you got married)
- Previous address or all list of previous address
- Financial links with someone i.e. your wife /partner or any joint account you held previously
- Electoral roll details
It also contains details of any debts you have such as:
- Personal loans, including payday loans
- With catalog companies
- Credit and store cards
- Utility suppliers
- Mortgages and secured loans including bridging loans /second charge
- HP agreement
It also contains information supplied by the Insolvency Service and Registry Trust, showing if you’re subject to any of the following debt solutions:
England, Wales, or Northern Ireland:
- Trust deed
In all countries, any bankruptcy restriction orders or undertakings will also be shown.
It also shows court judgments where a lender or other organization has taken you to court, including:
- County Court and High Court judgments (CCJs) in England and Wales
- Decrees (Scotland)
- Money judgments (Northern Ireland)
- Magistrates – financial penalties (England and Wales only), but only if the court has ordered this because payments have not been made
Who looks at your credit report?
When you apply for credit, the process usually involves you giving your consent/permission to the credit provider to check your credit report.
The term “credit provider” doesn’t only include banks and credit card companies but also mail-order companies and, for example, providers of mobile telephone services if you have a phone contract, but not if you’re on a pay-as-you-go deal.
Employers and landlords can also check your credit report, although they’ll usually only see public record information such as:
- electoral register information.
- insolvency records.
- County Court Judgements (or Decrees in Scotland).
How do I read my credit report?
Each of the debts included in your credit report will show some or all of the following information:
- Whether the account is still active (open), or closed
- “Defaults” on your accounts
- Payment history, showing whether payments are up to date or in arrears (in other words, you’re behind on your payments)
- Current balances owed or the credit limit
- Whether the debt has been passed to debt collection agencies
- Whether reduced payments are being made as part of a DMP or similar arrangement
- Whether you were ever registered as “gone away”
- Details of accounts in “dispute”
- Whether you’ve withdrawn cash on a credit card
For closed accounts, whether the debt is:
- Settled – the debt was paid in full and never defaulted
- Partially settled – the lender accepted a reduced amount to settle the debt
- Satisfied – the account was paid in full but previously defaulted
- Partially satisfied – the lender accepted a reduced amount to settle the debt, but the account previously defaulted
How long does information stay on my credit report?
As a rule, information on your credit file is removed after six years, however, there are a few exceptions to be aware of.
- Bankruptcy restriction orders or undertakings appear for their duration (up to 15 years), In some cases there are indefinite bankruptcy which may remain throughout your report period
- Individual voluntary arrangements (IVAs) are removed six years from the date of approval, or once they’ve been formally completed (this can take longer than six years)
- Magistrates fines in England and Wales appear up to five years
Review your credit report?
If you review your credit report and find that there are any issues or incorrect entries, you can contact the credit reference agency or the lender involved to have incorrect information corrected or removed. This is important because mistakes in your report could prevent you from being able to obtain credit.
You may be able to remove:
- Debts took out in your name that is fraudulent (i.e. not yours)
- Financial associations such as out of date or incorrect financial connections
If you think that you may have been the victim of fraud, contact “Action Fraud” and inform the CRA and the lender.
To remove a financial connection you’ll need to fill out a “notice of correction” available from your CRA.
Notice of Correction – Putting things right
You can also ask the credit reference agencies to add a notice to your credit report of up to 200 words long which potential lenders will see. This notice can explain the cause of your debt, or explain to a lender why the information on your credit file may be misleading.
Usually, credit decisions are made automatically but adding a note means that your credit decision will be made by a person instead.
Your Credit Score
Your credit score is an assessment by a particular lender of how much of a credit risk you are, based on its own criteria and typically including CRA information.
A CRA might also provide your “credit score” for a fee, but this is just an indication based on the information they hold and isn’t the same as an individual lender’s score.
A good credit score is no guarantee you’ll be able to borrow money, as different lenders have different criteria for choosing customers.
Each CRA can provide you with what’s known as your “credit score”. The lower this number is, then the higher you are considered a “credit risk” and lenders may be less likely to give you credit.
The number is just a guide that CRAs give you, but it’s not used by lenders when they’re making their decisions about whether or not they should lend money to you. They use the information they get from CRAs and apply their own criteria to make their decisions, and they don’t make these criteria public.
However, you can use your credit score as a rough guide to how likely the CRA thinks that companies will lend to you.
What does a “CIFAS” marker on my credit report mean?
Cifas is a national fraud prevention service. It can place “Protective registration” and “Victim of impersonation” warnings on your credit file.
A “Protective registration” is a paid service that protects your identity from misuse. It’ll stay on your credit report for two years. You can apply on the Cifas website.
A “Victim of impersonation” is filed by your lender for your own protection if you’ve been the victim of identity fraud. It’ll stay on your report for 13 months from the date of entry.
If one of these is on your credit report, it gives potential lenders a fraud warning, telling them that in the past you’ve been a victim of fraud, or could be particularly vulnerable to fraud in the future. It is likely that all your banking facilities may get withdrawn.
What does this mean when I apply for credit?
Any application for credit may be subject to further checks to prove your identity. Because this is often a manual check, if you’re applying for credit your application could be delayed.
Having a marker under this section will not automatically mean your application will be rejected. It’s there to protect you from being a victim of fraud.
What if the Cifas marker is there by mistake?
If you think that a Cifas warning is on your credit file in error, you can get in touch with the lender who put it there to see if they’ll remove it.
Keep in mind though that they’re unlikely to remove an entry on your report if they believe the reason the marker was put on your credit file was justified. Creditors are legally obliged to report any fraudulent attempt on your account to the credit reference agencies.
Improving your Credit Score
If you’ve had trouble repaying debts in the past, and you’re thinking of applying for credit such as a mortgage you may want to improve your credit score, to lessen the chance of being refused credit and increase your chances of obtaining a better rate of interest.
The first step is to obtain your credit report and make sure that all the information held about you is correct. Make sure you’re on the electoral register and keep your household utility bills up to date. Don’t have too many separate cards or accounts, if you have a lot, especially ones you don’t use anymore, consider closing some of them.
Taking out a small amount of credit and repaying it on time may improve your credit rating by showing you can use credit responsibly, A good example of this is getting a credit card with a small limit, spending on it, and clearing the balance straight away.