What you need to know about your credit report

Your credit report contains information that allows lenders to make informed decisions about whether and how much credit to offer you. So it's important that you make sure your credit report is accurate.

• What's in a credit report?
• Where does this information come from?
• Who can see my credit report?
• How do lenders use credit reports?
• What should you look out for?
• What if I find something wrong or missing?
• How can I improve my report?

What's in a credit report?

Your credit report contains a variety of information, from your current address to details of the credit cards, loans and mortgages you have now or have paid off in the past six years. There are details of your repayment record along with a record of any court judgments against you, again over the last six years.

Other information includes whether you are on the electoral register and the names of your financial associates - anybody with whom you share a relevant account, such as a joint mortgage.

Where does this information come from?

Credit reports are compiled and held securely by credit reference agencies - the data comes from a variety of sources. Much of it is contributed by lenders, with some - such as court judgments, bankruptcies and electoral roll information - held on publicly-accessible registers.

Who can see my credit report?

You have a right to see your report, of course. Lenders, who pay a subscription to the credit reference agencies, can also check your report with your consent.

How do lenders use credit reports?

Lenders take the information in your credit report, along with what you have told them on the application form, and compare it with their own information on people with similar financial profiles to judge the likelihood that you will repay a loan or other debt reliably.

What should you look out for?

It is important that your credit report correctly and accurately reflects your financial circumstances, so you should check it regularly. Incorrect or out of date information could adversely affect your ability to get the credit you want. You should also keep an eye out for any applications or loans that you do not recognise. These could indicate that you are a victim of identity fraud - one of Britain's fastest-growing crimes.

What if I find something wrong or missing?

Anything that is incorrect or inaccurate should be corrected. For example, if you find that a lender has searched your report and recorded a credit application search when you only asked for information, you should contact them and explain the circumstances, asking for a correction.

If you find an entry that is technically correct but needs further explanation - say, you missed some repayments because of an accident but have never had any problems before or since - you can draft a brief note that can be added to your report and will be seen by lenders in the future.

How can I improve my report?

Take some simple, common sense steps first. Get yourself on the electoral register, always make repayments on time, consolidate costly debts into a cheaper loan and so on.

Schedule regular checks on your credit report, in the same way that you check your bank and credit card statements. It acts as an up-to-date snapshot of your financial position and will show you if anything is going wrong, long before you could find out normally.

View your credit report for free with CreditExpert from Experian

21 February 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.