Your Credit Rating and How To Check It
There is a lot of confusion surrounding UK credit ratings, credit
scores, credit blacklists, credit reports, and credit files. This
guide to your credit rating aims to give you the facts you need.
What's in a Credit File
There are two major credit reference agencies in the UK, Equifax
and Experian, who maintain credit files on virtually every adult
in the country.
Almost all companies that give you credit terms will supply information
to one or both of these two credit agencies.
Therefore, your credit file is likely to contain information on
all your existing credit and loan arrangements, such as personal
loans, mortgages, credit and store cards, bank accounts, etc. In
addition, your credit record will contain information on any late
or missed payments and the amount of the original debt still outstanding.
The credit reference agency files also contain electoral roll information
for your address and court records relating to you. It is this information
which allows prospective lenders to confirm your address and also
see if you have any outstanding CCJs (County Court Judgements).
Whenever a mortgage lender or other company is assessing an application
for credit, they will check the details held on you by Equifax and/or
Experian. The reason they do this is because, by law, they are not
allowed to request any information about you from any other companies
with whom you have a credit agreement.
Also, by contacting one of these two agencies they can gain access
to your entire credit history with just a single request rather
than having to gather the information from multiple sources.
Each time a lender makes a search of your credit file, that search
will be recorded and added to your file, leaving a credit check
"footprint". Therefore, it is easy for a prospective lender to see
if someone has been "shopping around" for credit, and this in itself
could be a deciding factor in whether or not they agree to give
you a mortgage.
Your credit file will also include details of other people living
at your address if they are financially linked to you, or if the
credit reference agencies think they are financially linked to you.
In this way, other people's bad credit history can sometimes drag
down your credit score. But if you find you are wrongly linked to
another individual, you can write to Experian and Equifax and ask
them to correct the mistake.
How Can I See My Credit File and Correct Any Mistakes?
Under the terms of the Data Protection Act, the credit reference
agencies Equifax and Experian are required to provide you with a
copy of the information they hold on you in return for a small administration
fee. At the time of writing (2004) the fee for each agency is 2.
Your details are supplied by post, but you can request a copy of
your file by telephone, post or email. Details or how to apply can
be found on the Equifax and Experian websites.
Remember that because some companies supply information to Equifax,
some to Experian, and some to both, you will need to order copies
of your file from both agencies in order to get a full picture of
your credit record.
Alternatively, there are online services that will allow you to
undergo a free credit score check, as well as download (for a fee)
a copy of your full credit report.
If, after having obtained a copy of your credit file, you find
that it contains errors, you can take the matter up with Equifax
and/or Experian and ask them to correct the mistakes. Full details
of the procedure for correcting your file are available on the companies'
websites and are also sent in the post along with the copy of your
Credit Scores, Credit Ratings, and Credit Blacklists
First of all, let's dispel a popular myth.
A lot of people think that there is a "blacklist" you can end up
on if you have a particularly poor credit history, and that if you
are on this list you will automatically be refused credit.
This is simply not true - there is no such thing as a credit blacklist.
If you have been refused a mortgage or other form of credit, the
reason will be because your credit score was not high enough.
When a lender requests information about you from a credit reference
agency, they apply a mathematical formula to that information in
order to give you a credit score. Different lenders will use slightly
different factors to create the score.
Also, the definition of a good or acceptable score will vary from
one mortgage lender to another. Therefore, it is quite possible
to be turned down by one lender but be accepted for a mortgage by
Given that you are potentially worsening your credit score every
time you approach a lender about a mortgage and they run a credit
check on you, and given that different lenders will have different
criteria for assessing your credit worthiness, it makes sense to
talk to the experts right from the start if you are looking to take
out a mortgage but suspect you may be hampered by a poor credit
If you're worried that a poor credit record may affect your ability
to obtain a mortgage or remortgage, you should take the time to
find a mortgage adviser who specialises in finding mortgages and
remortgages for people with credit problems.
Manage My Credit -
a website devoted to providing advice on managing your credit and debt