With more UK families and individuals than ever applying for credit, we wanted to highlight why getting to know your credit score and your credit history is an important step in building and maintaining a healthy credit rating.
Here at Credit Report.org.uk we aim to provide UK consumers with the right tools and information to enable them to take control of their credit history. If you're about to apply for a credit card, loan or mortgage (or have been refused credit in the past), then our useful guides will help you to understand just how the credit system in the UK works, and how you can check your own credit history safe and securely online.
What is a Credit Report?
Your credit report is an official record of your personal credit history. Potential lenders will check your report when you apply for a form of credit such as a credit card, loan, or mortgage.
Your credit history will affect whether or not your application is successful and can also affect the rate of interest you are charged if you are approved. If you have recently been refused credit, it is often a good idea to check your credit file to find out the potential cause(s) for the refusal.
In order to make sure that you have the ability to receive affordable credit as and when you need it, it is crucial that your credit history is in good order and up to date.
In the United Kingdom there are three main credit reference agencies that hold information on all the financial activity in the UK. These are Experian, Equifax, and CallCredit.
Under the Consumer Credit Act 1974 you have a legal right to request a copy of your credit report for just £2. All three companies also offer premium services to help manage your file (with recurring monthly charges usually around £14 per month).
What is a Credit Score? (also known as a Credit Rating)
When applying for a loan, mortgage, overdraft facility, credit card or any other form of credit, the lender will use your credit score (also known as your credit rating) to calculate whether or not you are deemed to be a good creditor or a risky one.
The exact system for credit scoring is never made public and does vary from lender to lender, and depends on the specific line of credit requested. So it is worth keeping in mind that just because one lender rejects your application, it doesn't necessarily mean that all of them will.
Your credit score is a quick way for potential lenders to see if you're a safe risk which enables them to make a decision on whether or not approve you for the line of credit you have requested.
Your credit score doesn't just dictate what credit is available to you, but it can also dictate the type of credit you can receive. For example you may not be eligible for certain low APR credit services if your score's too low, and you may be limited to how much you can borrow.
What information is stored on your Credit File?
Your credit file will contain personal information about yourself, your partner, and previous addresses, along information from the electoral roll, any court judgements you hay have incurred, and the details of any bankruptcies.
The report will also include a detailed breakdown of all your current and previous financial accounts, previous credit applications, and how much credit you currently have available (amounts available on credit cards etc), along with your history of paying off debt.
Here's a more in-depth look at the information that will be included in your report
- Electoral Roll
Potential lenders will use information available on the electoral roll to check the identity of the people that apply for credit and to make sure the addresses they submit are correct.
As a result, your credit file will list entries under the electoral roll detailing your full name, your local authority, the address that your local authority has on file for you, along with any previous addresses and the dates they were registered.
Information from the electoral roll is published each year in December, with information that the public has supplied to local authorities.
Experian update their records every 12 months, but should you move home in the course of the year, your local authority will inform Experian about the change in registration themselves.
- Court Judgments
The details of any court judgments will also be listed on your credit report. The judgments will be listed on your credit report for six years from the date of the actual judgment.
This information is provided to Experian from the Registry Trust which is an independent organisation established by the Lord Chancellor's Department.
Any court judgments that are paid in full within one month can be removed from your records providing that a Certificate of Satisfaction has been issued by the court.
Any judgments that are paid off after one month will still be kept on file but will be marked as "satisfied" once the Certificate has been issued by the court.
If you have been declared bankrupt, then the credit reference agencies will gather this information from the official gazettes. Details of your bankruptcy will be held on your credit file for six years from the date of the bankruptcy order.
- Information From Lenders
Experian will also hold information about any credit accounts and their lenders over the course of the last six years.
Some lenders will only provide information on customers that have failed to keep to the terms of their credit agreements, but most lenders will provide information over the course of the credit account.
Lenders use this information to easily identify good payers aslong with bad payers and individuals who have a number of credit accounts.
Credit accounts are often classed as either settled, active, defaulted, or delinquent.
- Bankruptcies
If you have had a bankruptcy order against you annulled or discharged, then it is important you send a copy of the Annulment Certificate or Order of Discharge to the credit reference agencies. This will in turn enable them to update their records with this information.
In most cases if your bankruptcy has been annulled then they should remove any record of it from your credit file. However, if you have bankruptcy has been discharged then a record will still remain on your file but will be detailed as discharged.
Settled Account
A settled account is where you have repaid your credit in full to the lender. Credit agencies will keep a record of settled accounts for a period of six years from the date you made the last payment and paid off all amounts owed to the account. Any payment history shown on your report for settled accounts will relate the period before you repaid your credit.
Active Account
An active account is one that you are still currently using. Credit reference agencies will keep a record of any active accounts until they are finally settled, and then store the information for six years following.
Defaulted Account
A defaulted account is a credit account that has failed to keep to the credit agreement. Agencies will keep a record of any defaulted account for a period of six years from the date the credit agreement was broken.
If you have successfully paid off the full amount since the credit agreement was broken, the account will be shown to be satisfied at the balance.
Delinquent Account
A delinquent account is where 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.
On your credit report, each record of a credit account will include a history that will detail whether or not payments have been regularly made on time.
The credit accounts can also include your payment record over the course of the most recent 36 months.
Often the last 12 month's payments are shown, along with a summary of the payment history over a period of up to 36 months.
In the summary, for "number of status 1-2" and "number of status 3+" identify how many times payments been up to two months late, or three or more months late, within the last 36 months (or since the account was opened).
Other information that will appear on your report
You credit file will also likely include a record of lenders that have searched your file as a result of you applying for credit (over the last 12 months).
This information is useful for lenders as they can use it to highlight any unusual credit activity, or any possible over-commitment.
If you see any "unrecorded queries" on your file, then that is a company search for non-lending purposes. This information is only displayed to yourself and won't be listed to lenders who search your file in order to make a lending based decision.
Some lenders also do a credit search in order to give you a credit quotation. These are often recorded as quotation searches so other lenders do not treat them as credit applications.
Credit reference agencies will also make a record (known as a footprint) on your report to show that a file has been applied for in your name and address. This information will only be displayed to you, and won't be show to lenders.
Your previous addresses or any address you may have used in the past for correspondence will also be detailed on your report. These links are created by account information moving between addresses, as a result of lenders checking your records at previous addresses, or as a result of information you give to the credit reference agency.
Your credit report will detail the two addresses that are linked, along with how they are linked, and the date and source of the linked information. These links will only be removed when the credit reference agencies are asked to do so by the organisation that created the link.
Organisations that may be displayed on your report
There are a number of organisations that may be recorded on your file. Here's a detailed explanation of these organisations, what they do, and what it means if they are mentioned on your report.
- CIFAS
Developed by the Office of Fair Trading and the Office of the Information Commissioner, CIFAS is system dedicated to detect and prevent fraud, and to protect innocent people whose names, addresses and details have been used fraudulently in order to gain credit.
If you see a CIFAS warning on your credit report it doesn't mean you are being accused of fraud. Organisations who are members of CIFAS do examine credit applications very carefully and may even contact you to make sure you have actually applied for the credit. They won't automatically refuse credit applications from people with warnings on their file.
- GAIN - Gone Away Information Network
GAIN is a network through which lenders share information about customers with debts who have moved home without informing the of the change of address, or leaving any forwarding address.
The information recorded may include the address the customer moved from, and any such address they have been recorded as living at since.
All credit reference agencies are members of GAIN.
Want to learn more about your Credit File?
Here are a number of articles, guides, and resources to help you better understand your credit history and more importantly how you can help to improve your credit score
