For those looking to borrow money, or for anyone who uses finance in their life, credit scores are everything. A good score means you have access to the best deals on the market, at the best rates. A poorer score however means that you will be restricted in what you can borrow. What’s more the rates offered if lenders do accept you will often be higher than for those with a clean report. Thus is it highly advised to regularly check your credit report and see if it is healthy. And if not, what you can do about it. Moolr took a look at how to check your credit score.
Who compiles credit reports?
In the UK, companies called ‘credit reference agencies’ (CRAs) compile information on how well you manage financial decisions and make your payments.
There are three main CRAs:
- Experian
- Equifax
- TransUnion.
Each of them holds a file on you, called a credit report (or credit file), although the information might differ slightly between the agencies. The general criteria used however is the same.
What is in your credit report?
Your credit report typically holds the following information:
- A list of your credit accounts. This includes bank and credit card accounts as well as other credit arrangements. These can include outstanding loan agreements or utility company debts. The lists will show whether you have made repayments on time and in full. Items such as missed or late payments or defaults will stay on your credit report for six years usually.
- Details of any people with financial links to you. For example, where you have taken out joint credit.
- Public record information such as County Court Judgments, house repossessions, bankruptcies and individual voluntary arrangements. These also stay on your report for six years.
- Your current account provider, but only details of overdrafts.
- Electoral register details.
- Name and date of birth.
- Current and previous addresses.
- Any instances of you committing fraud, or where someone has stolen your identity and committed fraud.
Your credit report doesn’t carry other personal information such as your salary, religion or any criminal record.
Who utilises your credit report?
When you apply for credit the process will involve you giving your permission to the credit provider to check your credit report.
Employers and landlords can also check your credit report, although they’ll usually only see public record information such as your electoral register details, any insolvency records or CCJs.
How lenders use credit reports
Bear in mind that different lenders look for different things when looking at your credit report and deciding whether to lend to you. They use reports though to check your record at paying back debts on time and in full. For lenders it is a matter of trust. Your score will decide whether they will lend to you, and what rates they will offer.
How to check your credit score and credit report
All credit agencies have a statutory obligation to provide you with a copy of your credit report for free. You can access the report online or by asking for a written copy.
It’s often worth getting a copy of your credit report from all three main CRAs if you’ve not applied for it before or if you’ve not checked it for quite some time. That’s because they might have different information from different credit providers, although there is quite a lot of overlap between them.
When To Check Your Report
If you’re applying for a loan, mortgage, credit card or other borrowing then it might be a good idea to check your credit report first. This is especially true if you have not looked at it for some time. It always makes sense to check it from time to time in order to ensure there are no mistakes. you could even notice missed payments that you did not know about.
You can check your credit score as often as you like and it won’t affect your credit rating or credit score. Only when you apply for credit and lenders search your credit report that there’s a record left on your credit report. Thus it is important not to apply to loads of different companies for credit. It will leave marks and prospective lenders will see it as a sign of desperation.
