Your credit report is information compiled about you by credit reference agencies, such as Equifax, Experian and Callcredit. Whenever you apply for finance of any type, the lender will routinely check your credit report in order to decide whether to supply you or not. The credit report will also include a credit score, which helps the lender decide what interest rate to charge.
If you apply for a secured loan, the lender may pay particular attention to your mortgage payment history.
Your credit report contains the following:
Address details – current and previous addresses, including whether you are registered on the electoral roll
Credit history – a list of your credit accounts and whether you have made repayments on time, missed payments or even defaulted
Public information – County Court Judgments for non-payment of debts, Individual Voluntary Arrangements and Bankruptcies
Financial connections – people with whom you have a financial connection, such as a joint mortgage.
Is your credit report important?
If you want to take out credit at an appropriate interest rate, it is important that your credit report is accurate and up to date. It is your personal credit history. If there is an error you can contact the credit reference agency and have it corrected – but you will need proof.
Your credit report is also used by prospective landlords and employers to decide whether you are trustworthy.
How to improve your credit report
Pay your bills and make credit repayments on time, even if it is just the minimum.
Check your credit report to ensure that there are no errors.
If you have a joint account, make sure your partner does not have any financial problems. You will be linked on your credit report, known as a financial association.
If you have financial problems, talk to your lenders to work out a schedule of repayments you can afford or arrange a payment holiday.
Get free advice from Citizens Advice, National Debtline or Stepchange Debt Charity.
Close unused credit accounts. It is better to have fewer, well-managed accounts.
Register to vote at your current address. Lenders use the Electoral Roll as a precaution against fraud.
Your credit report records your behaviour for the last six years. If you want to obtain finance on the best terms, you ignore your credit report at your peril! Lenders want to see that you can manage your finances.
Never miss credit payments or pay late.
There is no such thing as a credit blacklist.
Each lender uses a different method in its credit decision-making. Lenders either calculate credit scores themselves or rely on the credit reference agencies for their scores. You will have different credit scores depending on where you apply for credit.
Paying off debt may boost your credit score.