Your Credit Rating and How to Check It
There is a lot of confusion surrounding UK credit ratings,
credit scores, credit blacklists, credit reports, and credit
files. This guide to your credit rating aims to give you the
facts you need.What's in a Credit File
There are two major credit reference agencies in the UK, Equifax
and Experian, who maintain credit files on virtually every adult
in the country.
Almost all companies that give you credit terms will supply
information to one or both of these two credit agencies.
Therefore, your credit file is likely to contain information on
all your existing credit and loan arrangements, such as personal
loans, mortgages, credit and store cards, bank accounts, etc. In
addition, your credit record will contain information on any
late or missed payments and the amount of the original debt
still outstanding.
The credit reference agency files also contain electoral roll
information for your address and court records relating to you.
It is this information which allows prospective lenders to
confirm your address and also see if you have any outstanding CCJs.
Whenever a mortgage lender or other company is assessing an
application for credit, they will check the details held on you
by Equifax and/or Experian. The reason they do this is because,
by law, they are not allowed to request any information about
you from any other companies with whom you have a credit
agreement.
Also, by contacting one of these two agencies they can gain
access to your entire credit history with just a single request
rather than having to gather the information from multiple
sources.
Each time a lender makes a search of your credit file, that
search will be recorded and added to your file, leaving a credit
check "footprint". Therefore, it is easy for a prospective
lender to see if someone has been "shopping around" for credit,
and this in itself could be a deciding factor in whether or not
they agree to give you a mortgage.
Your credit file will also include details of other people
living at your address if they are financially linked to you, or
if the credit reference agencies think they are financially
linked to you. In this way, other people's bad credit history
can sometimes drag down your credit score. But if you find you
are wrongly linked to another individual, you can write to
Experian and Equifax and ask them to correct the mistake.
How can I see my credit file and correct any mistakes?
Under the terms of the Data Protection Act, the credit reference
agencies Equifax and Experian are required to provide you with a
copy of the information they hold on you in return for a small
administration fee. At the time of writing (2004) the fee for
each agency is £2.
Your details are supplied by post, but you can request a copy of
your file by telephone, post or email. Details or how to apply
can be found on the Equifax and Experian websites.
Remember that because some companies supply information to
Equifax, some to Experian, and some to both, you will need to
order copies of your file from both agencies in order to get a
full picture of your credit record.
Alternatively, the online service available from checkmyfile.com will allow you to undergo a
free credit score check, as well as download (for a fee) a copy
of your full credit report.
If, after having obtained a copy of your credit file, you find
that it contains errors, you can take the matter up with Equifax
and/or Experian and ask them to correct the mistakes. Full
details of the procedure for correcting your file are available
on the companies' websites and are also sent in the post along
with the copy of your credit file.
Credit scores, credit ratings, and credit blacklists
First of all, let's dispel a popular myth.
A lot of people think that there is a "blacklist" you can end up
on if you have a particularly poor credit history, and that if
you are on this list you will automatically be refused credit.
This is simply not true - there is no such thing as a credit
blacklist. If you have been refused a mortgage or other form of
credit, the reason will be because your credit score was not
high enough.
When a lender requests information about you from a credit
reference agency, they apply a mathematical formula to that
information in order to give you a credit score. Different
lenders will use slightly different factors to create the score.
Also, the definition of a good or acceptable score will vary
from one mortgage lender to another. Therefore, it is quite
possible to be turned down by one lender but be accepted for a
mortgage by another.
Given that you are potentially worsening your credit score every
time you approach a lender about a mortgage and they run a
credit check on you, and given that different lenders will have
different criteria for assessing your credit worthiness, it
makes sense to talk to the experts right from the start if you
are looking to take out a mortgage but suspect you may be
hampered by a poor credit record.
If you're worried that a poor credit record may affect your
ability to obtain a mortgage or remortgage, Clean Slate
Mortgages can help put you find a mortgage adviser who
specialises in finding mortgages and remortgages for people with
credit problems.
It’s good to prepare a credit report in advance for the purpose of dealing with the issue of bridging loan. But before you go any further to consolidate debt, you need the help of a debt help professional. All small business owners are fully aware of the importance of the term “bridging finance”, and the term is widely applicable to the entire process of raising debt capital. It’s a better idea to work with your creditors in order to pay debt down.
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