Understanding credit reports

If you need help resolving credit report problems, understanding your credit report or if you have become a victim of identity fraud, independent help and assistance is available by visiting

www.creditreportadvice.co.uk

If you are one of the majority of people who do not regularly check their credit report you may be surprised at the amount of information that is included on it. In addition to details of credit accounts, court judgments and bankruptcies, credit reports include details of when and where you have been registered on the electoral roll, a record of the credit applications you have made in the last year, financial connections to other people and links to any addresses you have had a financial connection with.

The information on your report will help lenders make a decision about whether or not to enter into a credit agreement with you but it is used for other reasons too. The information held may be used to authenticate you – to establish whether you are who you say you are and living at that address. Lenders have to make these checks because of the amount of identity fraud that is now in our society.
Credit report information is also used in debt collection, ongoing account management (for example, if a credit limit is being reviewed) and the way the information is credit scored can affect whether or not you are offered the best deals – this is not limited to just credit cards but also utilities, mobile phones and insurance. Credit report information is not only used by the private sector, it is also used effectively in the public sector.

It is therefore extremely important to check the information held about you and make sure it is accurate and up to date. Credit reports can be obtained for a statutory £2 fee from one of the three credit reference agencies www.callcredit.co.uk, www.equifax.co.uk or www.experian.co.uk. Alternatively, versions of all three reports can be obtained from www.checkmyfile.com.

Checking a credit report will also help determine whether you have been a victim of identity fraud. If there are details of credit applications or credit accounts or links to addresses that you have no knowledge of, it may mean you are an identity fraud victim. Identity fraud is an ongoing problem and the damage that can be done to a credit report can take months to resolve. It is far better to make regular checks and, if it does happen, act quickly to minimise the impact.

While having a poor credit history can prevent you from obtaining finance and the best deals, having little or no information on a report can also create problems. It is often the case that only one person in a partnership has a credit history (secondary card holders to not feature on credit reports). Where this happens the other party may find it difficult to obtain credit in the future. It is better for both parties to have a credit history to avoid any future problems.

Credit reports only include information about the person it relates to although it will show financial connections to anyone else. If a financial connection does exist lenders may take the credit history of the other person into account when deciding whether to provide finance. If you are experiencing difficulties when making credit applications and there is no apparent reason why, it may be worth you asking the person you are financially connected with to request their credit report.

Many organisations use credit scoring when deciding whether to lend. In the UK people do not have a single credit score. Different scores are produced by different organisations and even for different product offering. Scores are produced using credit report information but also information provided on an application form and, if you are an existing customer, the information the organisation already holds about you.

Helen Lord
Director
CreditReportAdvice

www.creditreportadvice.co.uk

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