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5 Dec 2019

One in five people have an error on their credit report: have you checked yours?

Inaccurate information can affect your chances of accessing the best credit deals

The information in your credit report determines your access to financial products, but many people have found theirs to be inaccurate, new Which? Money research reveals.

We surveyed 1,105 members of the public and found that nearly four in 10 have never checked their credit report.

Of those who had checked their report, more than a fifth said they had found an error.

An error could be an incorrect address, a false record of missed payments or even a credit product fraudulently taken out in your name. Any of these could hinder future credit applications.

Here we explain why checking your credit report is key to getting the best deals on financial products.

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What is a credit report?

If you're 18 or older and have ever taken out a credit agreement - whether that's a mortgage, overdraft or mobile phone contract - you'll have a credit report.

Your report is a record of credit accounts you've held and whether or not you've kept up with repayments, and helps potential lenders to assess how risky you are as a potential customer.

It's produced by credit reference agencies (CRAs). The three biggest CRAs in the UK are Equifax, Experian, and TransUnion (formerly known as CallCredit).

Why you should check your credit report

Checking your credit report regularly will give you the chance to spot things that could affect your chances of getting credit, such as errors or even fraudulent applications made in your name.

Bear in mind that not every lender shares information with every CRA. This means it's worth checking your report with each of the three main CRAs.

A third of those we surveyed thought a £2 fee applies to check your credit report, but since the GDPR regulations came into force in May 2018, it's now free and easy to do.

How to correct credit report mistakes

Our survey found that more than a quarter of those who had spotted an error on their report didn't take steps to get it corrected.

If you find information in your report that you disagree with, you can take this up directly with the lender in question or alert the CRA, which will contact the lender on your behalf.

The CRA has up to 28 days to deal with the dispute and confirm what action it will be taking.

The quality of credit report information is currently under scrutiny by the Financial Conduct Authority, which is also investigating the effectiveness of competition between CRAs as well as how well consumers understand their reports.

Common credit report myths busted

Just two out of the 1,105 people we surveyed were able to correctly identify all of the information included on a credit report from the list of 20 options we gave them.

We also found widespread confusion about the role of credit reports and how lending decisions are made.

Here are three of the most common misconceptions:

  • Credit reference agencies make lending decisions. Over half (54%) of people we surveyed incorrectly thought that credit reference agencies (CRAs) have a say in whether you're accepted or rejected for credit applications. But CRAs have no involvement in your application, other than to provide lenders with data about you and your credit history.
  • Having a poor credit history will put you on a credit blacklist. Eight in 10 people we surveyed mistakenly believe you can be banned from borrowing. In reality, every lender you apply to will carry out its own assessment to determine whether it's willing to accept you as a customer.
  • Student loans are recorded on your credit report. Unless you started university between 1990 and 1997 and have a pre-1998 mortgage-style loan. Even then, only deferred or missed payments will show. Your salary, savings, and council tax payments aren't recorded on your credit report either.
  • The full article appeared in the December issue of Which? Money magazine. You can try Which? Money today for just £1 to have our impartial, jargon-free insight delivered to your door every month.