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Credit reports: All you need to know

By Rob Goodman

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Credit reports: All you need to know

Your credit report plays a key role in determining which financial products you can access. Find out how they work.

Video transcript

[MUSIC] There's more than one version of your credit report. That's because not all lenders share data with all three major agencies, Callcredit, Equifax and Experian. So it's worth checking your report from each one. [MUSIC] The most recent information on your report is the most important.

Account data stays in your report for up to six years, but an old mispayment is unlikely to scupper your chances at getting credit as lenders are most interested in your current financial circumstances. Regularly checking your report is a great idea, it can help you to spot if someone has made a fraudulent application in your name or if they're any mistakes that might reduce your chances of getting the best credit deals.

For more information visit which.co.uk/credit report [SOUND]

What is my credit report?

Think of your credit report as your financial CV. It contains information that helps lenders confirm your identity and decide whether you’re a reliable borrower. 

This includes details of credit accounts you’ve held (and whether or not you’ve kept up with repayments), your current and previous addresses, and any financial connections – for example, the name of the person you share a joint account with.

Credit reports are compiled by commercial organisations called credit reference agencies. There are likely to be three slightly different versions of your credit report, because lenders don’t always share the same information with all three major credit reference agencies - Callcredit, Equifax and Experian. 

Here we explain why it's important to check your report, how to do so for free, and what to do if you spot any errors in it. Jump to:

 

Why you should check your credit report

Aim to check your credit report at least once a year, and before applying for credit. Not only will this allow you to pick up on any mistakes that could reduce your chances of getting the best credit deals, but you'll also be able to spot if any fraudulent credit applications have been made in your name. 

Because the information held on you can differ between the credit reference agencies, it's best to check all three. You'll never be penalised for checking your report, so you're free to do so as often as you like. 

 

How to check your credit report for free

Under the Consumer Credit Act 1974, you have a legal right to access a copy of your credit report at a cost of £2 per credit reference agency. However, there are ways to check it for free: 

Experian

Equifax

  • Signing up to Clearscore will give you your Equifax report free every month. 
  • Like Experian, Equifax also offers a free 30-day trial of its full credit monitoring service. It costs £9.95 a month after the free trial. 

Callcredit

  • Callcredit offers free access to its credit reports through a service called Noddle.

For more information on the different services offered by credit reference agencies, see our guide on how to check your credit score for free.

 

Credit reports: what information is included?

Some of the information held in your credit report will come from banks, building societies and credit card companies you have borrowed from in the past, or that you currently owe money to. Other facts on your credit file may come from publicly available sources (such as the electoral register) or be supplied by utility companies.

What's included

  • your name, address and date of birth
  • whether you are on the electoral roll at your current address
  • how much you currently owe lenders
  • any late payments on existing or past credit card or loan accounts
  • any missed payments on existing or past accounts
  • any County Court Judgments (CCJs) made against you
  • whether your home has been repossessed or you have moved away owing money
  • whether you have been declared bankrupt or entered into an Individual Voluntary Arrangement (IVA).

What's not included

  • the amount of money in your current account
  • your salary
  • savings accounts
  • student loans
  • criminal record
  • medical history
  • parking or driving fines
  • council tax arrears

 

Credit report mistakes – how to make a correction

If you spot a mistake on any of your credit files, it's important to get this rectified – otherwise it could harm your ability to get credit later. Mistakes can range from basic errors relating to your address details to incorrect information supplied by your bank, which could deter another company from lending to you. 

You may even come across fraudulent activity, such as a credit application made in your name.

If you do spot a mistake, you can contact the company that provided the information or the credit reference agency itself to get it corrected. 

The agency has 28 days from your request to tell you if it has removed the entry, amended it, or taken no action. The entry will be marked as 'disputed' in the meantime. This is so any lender searching your file will know not to rely on that piece of information.

If the credit reference agency doesn't amend your records, you can add what's known as a 'notice of correction' (up to 200 words) to your file. This can be used to explain why you think a particular piece of information is wrong or to highlight any mitigating circumstances – for example, a sudden bereavement that may have caused you to miss a credit card or loan repayment.

 

Seven credit report myths busted

Will having a poor credit history put you on a credit blacklist? Are you more likely to be accepted for credit if you've never borrowed? Take our quiz to see if you can separate credit report facts from fiction, then scroll down to learn more.
 

 
Myth 1: Having a poor credit history will put you on a credit blacklist

The credit blacklist is the unicorn of the financial world – everyone's heard of it, but it doesn't actually exist. And there's no single 'score' that lenders use when deciding whether to let people borrow.
Instead, lenders each use their own criteria to assess how risky a customer you're likely to be. This means it's possible that while one lender will reject you for a credit card or loan, another might accept you.

Myth 2: Credit reference agencies decide the outcome of credit applications

Credit reference agencies simply supply data to lenders who use this information to assess your application. As well as credit reference agency data, lenders will take into account any existing information they might hold about you, along with the details that you’ve submitted in your application.

Myth 3: You’re more likely to be accepted for credit if you’ve never borrowed

When assessing your application, lenders look for evidence that you'll be able to pay back what you borrow, so not having any record of successful repayments can count against you, even if you’re in rude financial health.
If you've never used credit, and this is preventing you obtaining it now, you might wish to consider applying for a credit-builder credit card – cards specifically tailored to help people build their credit rating.

Myth 4: Your credit report retains details of missed payments indefinitely

Many of the facts featured in your credit report will be removed after a certain period of time. Account data, including late or missed payments, remains on your report for up to six years after the account has been settled or defaulted.But it's worth remembering that lenders are less likely to rely on older data, so a missed payment from a few years ago is unlikely to have a big impact. 

Myth 5: All credit reference agencies hold the same information about you

Lenders should share information with all three CRAs (typically on a monthly cycle) but it's likely there'll be three slightly different 'versions' of your credit report.

This is largely because the amount of personal data in a credit report is growing, with companies starting to share information about customer payment habits but not necessarily to all agencies.

Myth 6: Checking your credit report too frequently will damage your credit rating

You'll never be penalised for checking your credit report, so you're free to look at any version as much as you like. In fact, it's a very good idea to check your report on a regular basis.

If there are any mistakes, for example, this could lead to you being unnecessarily rejected outright or paying over the odds to borrow. Checking your credit report can also alert you to any fraudulent activity. It's wise to check your credit report before applying for a credit card or mortgage.

Myth 7: Your credit rating is affected by the financial status of those you live with

Unless you have a 'financial connection' with someone – through a joint mortgage, for example – your credit rating won't be affected by anyone else's details.

But if you are financially linked with someone, lenders may look at their credit report as well as yours when assessing your application, as their circumstances could affect your ability to repay.

Find out more: How to improve your credit rating

  • Last updated: June 2017
  • Updated by: Rob Goodman
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