BBC News | CONSUMER | How good is your credit?

Every time you apply for credit, whether for a loan, mortgage or credit card, the lender checks your credit record.

To do this, they will contact central databases held by private companies, called credit reference agency.

What is a credit reference agency?

The role of these agencies is help lenders make decisions on whether or not to offer you credit. They do not make these decisions themselves, but supply financial information about you to the lenders.

The lender uses this information to make a decision on whether or not you are credit worthy.

What is on my credit reference file?

The first thing on your file will be information taken from the Electoral Roll. This will identify any addresses at which you've been registered.

Details of any earlier credit agreements will also appear. This is used to make sure you have repaid earlier loans on time.

Also, each time you apply for credit this is recorded, so all earlier credit applications appear on the file. The files do not say if that application was successful or not.

If you have had legal trouble with creditors in the past then chances are that will also be on your file. And your file may also include an County Court Judgements made against you.

Why should I check my credit file?

Most of us will go a lifetime without ever worrying about our files. But it can pay to be aware of what's on your credit file.

for sale
Will you qualify for a mortgage?

Mistakes do happen and it would be a pity to be refused a loan because of something you didn't do or because your record was incomplete.

Even if you are not applying for a loan, there are many services and products which will require some form of credit check (mail order account and mobile phone operators for instance).

Why do errors occur?

The world is an imperfect place, and unfortunately mistakes will happen.

Sometimes when payments or settlements are late, your details may be sent to the Credit Reference Agency and marked on your credit file, even though you may have paid while this is happening.

There can be mistakes in matching data to people, so for example, you may find an incorrect address listed on your records.

How do I get hold of my file?

There are two credit reference agencies in the UK, Experian and Equifax, and you should contact them both. They each hold slightly different information about you on their files.

Getting the information will cost you �2 and you need to include a cheque or postal order with your request.

What should I look for?

Check all the details on your file and make sure they are right.

Also make sure that they are up to date and include your latest credit details - typically the more good credit history you have the better your chances of getting more credit.

An information leaflet will be included with your file to help you understand the information and decipher the jargon used.

Things to check
Current and past addresses
Current and past credit agreements
Past credit applications
County Court judgements

If you find a mistake make sure you tell the credit reference agency about it. They will then take it up with whoever provided them with the information.

You may find details of other members of your family on your file. This can be useful in helping you get credit for the first time.

You can ask for your credit information to be separated from other members of your household by completing a Notice of Disassociation. The credit reference company can explain how you should do this.

How do I make myself creditworthy?

Ensure you are on the Electoral Register (check by contacting your Local Authority). A lender will want confirmation that you live at the address you are giving them on your credit application.

Do not make too many applications for credit in a short space of time -- it might suggest you are being turned down or you are overstretching yourself.

If you fail to meet a loan repayment, try to make it up quickly. Long-term non-payment will be noted on your credit file and will remain there for six years, making it difficult for you to obtain credit.

If you do find yourself falling behind with payments, keep the lender informed - don't ignore the problem.

How do I contact the agencies?

Experian Ltd Consumer Help Service, PO Box 8000 Nottingham NG1 5GX. You can also get information from the Experian website or by calling 0115 934 4050.

For free information leaflets from Experian, call 0870 241 4297 and leave your name and address.

Equifax PLC Dept 1E, PO Box 3001 GLASGOW G81 2DT. You can call them on 0990 143700 or take a look at their website by clicking here.


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