Money Insider: So do you know what's on your credit record?
Friday 15 March 2013
While most people have heard of the term "credit record", research by Aqua credit cards shows that less than half have ever checked their own file.
There are lots of reasons why. One is that many don't know where to get the information from and assume it's an expensive and complicated process. But the main reason is that people don't realise how much their credit history can affect their everyday life.
An impaired credit rating can prevent you getting a mobile phone contract, the best energy tariff, or could mean that borrowing with a credit card, loan or mortgage will be charged at a higher interest rate or result in your application being turned down.
There are three main credit reference agencies in the UK: Experian, Callcredit and Equifax. To get a copy of your own report from any of these companies costs just £2. You can choose to see the information online or arrange for a copy to be posted to you.
If you've never looked at your record, I'd recommend paying the £2 just so you can check exactly what information is registered against your name. For all you know details may be incomplete or incorrect, making it more difficult and more expensive to get a loan than it should. If you're interested in keeping a closer eye on your credit record, including monitoring changes in your credit score and being sent alerts when your record changes, you can buy a premium subscription from the credit reference agencies. However it will cost you almost a tenner per month for the extra service, so I'll leave it to you to decide whether you think that's value for money.
Your credit report will include your payment history. It has details of any late or missed payments on your existing loans and credit cards as well as previous cards and loans you've had in the last six years.
Your record will also include details of any bankruptcies and county court judgments as well as the amount you currently owe on your credit agreements, together with details of searches and new applications made.
Neil Munroe, director at Equifax, says: "Each lender will make its own assessment of a customer's borrowing application and will look at your credit record as part of that process, but it is the lender that decides whether an application is sanctioned, not the credit reference agency."
There are lots of myths surrounding credit reports which can be misleading. For instance, third party information, including members of your family who live, or have lived, with you should not appear on your credit file as long as you don't share any joint financial commitments. If you have any financial associations with former partners, such as joint accounts, make sure these are closed down.
By the same token, other people who have lived at your address previously should not affect your credit score. Also absent from your record are details of savings, student loans, Child Support Agency orders or criminal records.
How can you improve your credit rating? The key is to ensure you are registered on the electoral roll – otherwise you won't appear as being listed at your address if a lender makes a credit search. But you should also close credit card accounts that you no longer use. Even though your balance may be zero, prospective lenders will take into account any existing credit limits you have when assessing applications for new loans.
If you apply for credit and are turned down, don't make further applications with other lenders in the hope that one may say yes. Multiple applications and searches on your file in a short space of time will have a negative impact on your credit rating.
Having no record of managing credit can count against you, so it's worth having a credit card and using it a few times each year. As long as you repay the balance in full and on time it won't cost you a penny, but it will show you are capable of managing credit.
If you've had credit issues in the past, mainstream lenders are unlikely to give you credit. However there are specialist lenders, such as Aqua, Luma and Vanquis, which offer cards at a much higher interest rate to those with an imperfect financial record to help them to rebuild their score.
If you've never taken a look at your own credit file I'd recommend getting hold of a copy using the low-cost option as a start – it could turn out to be £2 well spent.
Andrew Hagger is an independent personal finance analyst from moneycomms.co.uk
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
Simon Read: Timeshare owners accuse Macdonald Resorts of land grab
Donald MacInnes: Let's pretend Scotland won and now a salmon is running the country
Bargain Hunter: Win a new iPhone 6
More than 300,000 adults are too deeply in debt to apply for bankruptcy
The HiFX guide to managing corporate foreign exchange and international payments
- 1 Mario Balotelli: Staff at arson-hit Manchester Dogs' Home convinced Liverpool striker is behind five-figure donation
- 2 Friends 20th anniversary: Alison Jackson photographs reunited cast
- 3 A bottle of wine a day is not bad for you and abstaining is worse than drinking, scientist claims
- 4 The response to my Pizza Express review has been overwhelming, and taught me a lot about journalism
- 5 Free U2 album: How the most generous giveaway in music history turned into a PR disaster
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
Scottish independence referendum: A nation divided against itself
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Russia freezes Ukraine into submission: Kiev admits country doesn't have enough fuel for winter
Scottish independence: The Queen breaks silence on referendum debate – as think tank warns of £14bn black hole if Scotland votes Yes
Archbishop of Canterbury admits doubts about existence of God
iJobs Money & Business
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...
Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...
£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...
Day In a Page
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize