Credit reference agencies hold important information about how all of us manage our finances, how much we owe, if we are registered to vote and where we live. Banks, credit card and loan companies use this information along with the information in credit applications and your past dealings with each company to help them, not only decide if they will lend you money, but also what interest rate you will pay on the money you borrow.
As a result it’s essential that you know what’s on your credit file so any mistakes or omissions can be rectified. Since last year you can check your credit reference agency information online by paying £2 to each company. You don’t have to do it online though and instead can send a cheque or postal order for £2 to each credit reference agency to receive your Statutory Credit Report. The three credit reference agencies are Callcredit (www.callcredit.co.uk), Equifax (www.equifax.co.uk)and Experian (www.experian.co.uk).
When the new online access was announced last year the Consumer Minister said: "These are highly beneficial changes. All consumers now have easier access to their £2 statutory credit reports, with victims of ID fraud and the financially vulnerable receiving free access to their reports. These significant improvements will help consumers take better control of their finances."
In order to get your credit report you have to give your full name and any addresses you have lived at in the last six years, and any names that you have used or been known by in the last six years, plus your date of birth. Watch out for companies offering ‘free’ ways to access your credit file – these are only free if you cancel them after a trial period or you will be signed up to a monthly or annual subscription. It’s not always as easy as it could be to find the £2 statutory report on their sites, but make sure you get the £2 statutory report.
You should check for any mistakes on your file and these can be rectified by contacting the company that recorded the information or the credit reference agency. For example, if your payment history is incorrect, or if you are linked to someone you don’t have a financial connection with. If you have a problem with information held by a credit reference agency contact the Information Commissioner (www.ico.gov.uk).
If you are turned down for credit you should contact the lender and ask it for the reason you were turned down. If you write to your lender and ask them to review the application you may be accepted when it is reviewed. If you are turned down you shouldn’t apply elsewhere immediately as each application you make will affect your credit score. Making too many applications in a short period of time could mean that you are turned down automatically.
When you apply for credit lenders use credit scoring to decide to lend to you or not. Credit scoring takes into account application details, information from credit reference agencies and any previous dealings you have had with the company. Contrary to popular belief there is no such thing as a universal credit score as each lender calculates your score differently. There is no easy way to improve your credit score – however there are some things you can do to keep it healthy. Being on the electoral roll can boost your credit score so you should register even if you don’t want to vote - check that you are registered with the Electoral Commission at www.aboutmyvote.co.uk.
Got questions? Get help from qualified Financial Advisers today!