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Credit file vs credit score – what’s the difference?

“Credit file” (or “credit report”) and “credit score” are terms that are often used fairly interchangeably, as if they represent the same thing. However, while both involve the same data these are two quite different elements in the picture of your financial health and history that available data can create. So, credit file vs credit score – what’s the difference?

What is a credit file?

This is essentially a potted history of your financial behaviour with respect to the credit that you possess or have used in the past. This information comes from public sources (e.g. the electoral roll). And also from private sources (e.g. data that is shared between lenders). Credit reference agencies collate the data who then put it together into a report. They make this available to lenders, mobile phone operators. In fact, anyone that you apply for credit with.

Credit file vs credit score – what’s the difference? What’s in a credit file?

There are three main elements to your credit file. Who you are, how you’ve borrowed and what you’ve borrowed.

  1. Who you are. This is personal information about you that confirms your identity. So, for example, this could include name and address, as well as where you registered to vote.
  2. What you’ve borrowed. This can cover a very wide range of credit, including credit cards and personal loans. Included here will be contracts for a mobile phone or internet provision. Potential lenders will be able to see what your current balances are. They can also access your total debt and a list of the credit accounts that you currently have.
  3. How you’ve borrowed. Your payment history is broken down into some detail in your credit file. It shows when payments have been made on time and when they haven’t. This will be a crucial part of the decision making process for a new lender. If you have a history of missing payments on credit cards they might be reluctant to offer you the credit you’re asking for.

Your credit score

There’s a perception that the UK has a universal system of credit scoring but in fact that’s not the case. There are three main credit reference agencies in the UK. Each one has its own system of scoring. So, you will have one score with Equifax, for example, and quite a different score with Experian. Each agency has a different top limit. Experian’s is 999, Equifax’s is 700, and Callcredit’s is 710. Nevertheless, all use the same data to calculate the scores that they produce. It’s your credit file that determines whether you have a bad credit rating or not and a credit score is simply a representation of this.

Credit file vs credit score – what’s the difference? How is a credit score calculated?

The information in your credit file is used by each of the individual agencies to calculate the credit score that you get.  The higher the score you have, the more likely you are to get credit with a new lender. However, it’s worth bearing in mind that there are no guarantees, especially because lenders use their own scoring systems to rate each potential borrower.

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