Credit Reports

What's on your Credit Report; where credit reference agencies get their information; what you can do to improve your Credit Report; how credit scoring works and why there's no such thing as a credit blacklist.

• Credit where credit is due!
• What is a Credit Report?
• What "public" information is on my Credit Report?
• What information from lenders is on my Credit Report?
• What else will be on my Credit Report?
• How can I make corrections to my Credit Report?
• What should I do if I've been refused credit?
• Am I on a credit blacklist?
• What is credit scoring?

Credit where credit is due!

The contents of your personal Credit Report can have a bearing on whether or not you are given credit. However, you do not have a single credit score and credit scores are not shown on your Credit Report. Factors other than the information held on a Credit Report may contribute to a lending decision as well (such as the information you provide to a prospective lender on your application form).

You have the right to view the information contained in your Credit Report to make sure it is accurate. You are entitled to apply to have errors corrected. Having the ability to view and challenge your Credit Report is important, as, in addition to providing the basis for a lending decision, your credit rating may also affect the interest rate you are offered by lenders.

Check out your credit report now with Credit Expert from Experian

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What is a Credit Report?

Credit Reports are compiled by credit reference agencies using information from two main sources:

• Public information: sources include the electoral roll, court judgments, individual voluntary arrangements and bankruptcies
• Information provided by lenders and financial institutions: e.g. credit accounts, credit applications and financial associations

When you apply for a loan, the lender will typically contact a credit reference agency to check the information on your Credit Report, in order to help them calculate your potential creditworthiness and risk. The credit reference agency itself does not offer any comment or advice and does not know how the information a lender has seen will affect the lending decision.

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What "public" information is on my Credit Report?

Public information on your Credit Report will include electoral roll entries showing the name of your local authority, the address the local authority holds for you, the names of the people registered to vote at that address and the dates those people were registered. Lenders use the electoral roll to check the identity of the people applying for credit and to make sure the addresses provided on application forms are correct. The electoral roll is published each December. Credit reference agencies update their records every year, but if you move home you can tell your local authority who will tell them about your change of registration in the course of the year.

Court judgments are held on your credit report for six years from the date of the judgment. Credit reference agencies receive the information from Registry Trust, an independent organisation set up by the Lord Chancellor's Department. Judgments that are paid within one month are removed from your records as long as a Certificate of Satisfaction has been issued by the court. Judgments paid after one month are kept on file but marked as 'satisfied' once a Certificate has been issued by the court.

If you have been declared bankrupt, credit reference agencies will obtain this information from the official gazettes. It is kept on your file for six years after the date of the bankruptcy order.

Check out your credit report now with Credit Expert from Experian

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What information from lenders is on my Credit Report?

Credit reference agencies hold information from lenders about credit accounts over the last six years. Accounts are classed as 'settled', 'active', 'defaulted', or 'delinquent'. A settled account is one where you have repaid your credit. The payment history shown on your file will relate to the period before you repaid your credit. An active account is one which you are still using.

A defaulted account is one where you have not kept to a credit agreement. Agencies keep a record of these accounts for six years from the date you broke the relevant term of the credit agreement. The record will show how much money you still owe (the default). If you have paid off everything you owe since you broke the credit agreement, the account will be shown to be 'satisfied' at the balance.

A delinquent account is one where your repayments have been at least three months in arrears for two or more consecutive months or have been late for more than three months over the past year. Every record of a credit account will include a status history. The last 12 months' payments are shown together with a summary of the payment history over a period of up to 36 months and will show whether payments have been made on time or have been late.

If you have given up a home to a lender or suffered a repossession, this will also appear on your Credit Report. The information may include the address of that home, the address from which the mortgage application was originally made, and the address that you moved to thereafter.

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What else will be on my Credit Report?

Your credit history will include a record of lenders who have searched your file as a result of you applying for credit over the previous 12 months. If your file specifies 'unrecorded enquiries', this shows that a company has searched your file for non-lending purposes. However, this information is shown only to you, not to lenders.

Lenders may also search your file to give you a credit quotation. These are recorded as quotation searches so other lenders do not mistake them for credit applications. Agencies make a record (known as a 'footprint') on your report to show that a file has been applied for in your name and address, but this will be shown only to you and not to lenders.

Your previous addresses, or any addresses you may use for correspondence, may be listed on your credit file. Your credit file will show the addresses that are linked, how the link was created, and the date and source of the link. The link will only be broken when agencies are asked to do so by the organisation that created the link.

Your file may include financial information about members of your family who live, or have lived, with you. The rules on using information about other people are changing and, in the future, financial information about other people will not be included on your file. After these changes have been made, only your own credit history, and that of anyone you specifically share a financial responsibility with, such as a joint bank account, will be provided to a lender.

Your Credit Report may also show a warning from CIFAS, The UK's Fraud Prevention Service. This warning does not mean that you are being accused of fraud as fraudsters tend to use a variety of names, some false and some genuine. When fraud is suspected, a warning is placed against the address or addresses linked to the application or account. The CIFAS warning therefore appears on the file of any person who has a link with the address.

Credit reference agencies are members of Gone Away Information Network (GAIN), a network through which lenders share information on customers with debts who have moved home without telling their lenders of a forwarding address.

Check out your credit report now with Credit Expert from Experian

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How can I make corrections to my Credit Report?

First of all, if you have not registered to vote, you may want to contact your local authority about filling in an electoral registration form. If you move home you can tell your local authority who will tell credit reference agencies about your change of voter registration address in the course of the year. If you believe any account information needs to be changed you should write to the lender concerned and ask them to give the correct information to the credit reference agencies.

If a "financial association" is shown, and you do not share a financial responsibility with the other person, or if that financial association no longer exists, you can ask the agencies to "create a disassociation". This breaks any connection between your information and the other person and so makes sure their information is removed from your file, and that your information is removed from theirs. To do this you must give the agencies your, and the other person's, full name and date of birth, details of your relationship and any shared addresses.

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What should I do if I've been refused credit?

If the decision was based upon your Credit Report, the lender should tell you the name and address of the credit reference agency they used. Establish why your application was declined before making further applications. If you have paid a County Court Judgment, make sure that it is shown as satisfied on your Credit Report. If it is not, contact the County Court and obtain a Certificate of Satisfaction. If you believe a judgment has been incorrectly registered, contact the court in question.

If a Bankruptcy Order has been discharged or annulled and this fact is not shown on your Credit Report, send a copy of the Order of Discharge or Annulment to all Credit Reference Agencies and ask for your report to be updated.

If you can pay any outstanding payments shown against credit account information, contact the lender concerned and also ask that they advise all credit reference agencies so that their records can also be amended. If a credit account has been paid but this is not shown on your Credit Report, contact the company concerned and ask them to make the necessary changes. If companies have searched your Credit Report more than once in response to only one application, again, ask them to make the necessary amendments.

If you have been linked to addresses with which you have no connection, contact the companies who created the links and ask for the address link to be deleted. If other members of your household, who have County Court Judgments or late payment histories, are recorded on your Credit Report you can ask for their financial connection to be removed. All Credit Reference Agencies will make these changes if you do not share a financial connection, such as outstanding joint accounts or judgments.

You may wish to add an explanation or 'Notice of Correction' to the information held, e.g. the reasons why an account fell into arrears at a particular time. This 'Notice of Correction' can be up to 200 words. Any future lender who sees the entry to which it relates will also see the Notice.

Check out your credit report now with Credit Expert from Experian

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Am I on a credit blacklist?

The simple answer is no, you're not. There is no such thing as a blacklist. Credit reference agencies only display factual information about people, most of which is provided by lenders. Companies make their lending decisions using credit scoring based on information held by credit reference agencies, additional information you may have provided, plus their own internal processes.

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What is credit scoring?

Credit scoring is a technique used by companies to help them assess the risk involved in lending someone money - it involves building a score based upon the details provided by you on the application form and the information held on your credit report.

If you are refused credit it may be that the information you supplied on your application form meant that you did not fit the lender's 'customer profile' and that the information held by a credit reference agency did not affect the decision. Different companies take different information into account and, therefore, your application may be accepted by one company but declined by another.

If you are declined credit the lender should tell you the main reason for this - whether their decision was based upon a credit score, information held on your credit file or on their own specific policy. If the decision was based upon your Credit Report, the lender should tell you the name and address of the credit reference agency they used.

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01 May 2008 © Moneyextra.com

Our senior editor Robin Amlôt recommends you should consider taking independent financial advice before acting on any article. Please contact us for help with your individual circumstances if any assistance is required.