A consumer’s credit score is calculated by a valuation of the applicant’s credit scorecard. It is comprised of employment history, assets, loan history, loan repayment, credit cards, whether the applicant is a house owner, a flat owner, a student and so on. Lender’s have proprietary means of scoring a consumer’s credit worthiness, so being extended finance by one does not necessarily guarantee another will extend the same amount of credit.
There are three credit scorecards computed by data provided by each of the three bureaus: Experian, Callcredit and Equifax. Some lenders use one of these three scores, while other lenders may use the middle score. A consumer’s credit score will range from 0 to 1000–the average score is 750.
Why should a consumer check their credit file regularly?
A consumer applying for finance will have their credit file pulled by the potential lender, which shows the lender both current and past addresses, mortgage information, bank account information, past credit applications and the history of past and present credit accounts. Though the Financial Services Authority regulates credit scoring in the United Kingdom, a full 16 percent of consumers found errors on their credit file.
What’s more, consumers should monitor their credit for not only inaccuracies that may cause them not to secure a loan or line of credit, but for potential identity theft and unauthorized use. There are many online services that will monitor an individual’s credit file, but usually charge a monthly fee for the service.
When obtaining a credit report, consumers ought to have a detailed list of all previous residential addresses in which they lived in the past six years, any name change and date of birth.
In order to obtain a copy of your credit scorecard, consumers may do so by way of post (for a £2 fee) or online. The United Kingdome has three credit agencies:
Equifax – http://www.equifax.co.uk
PO Box 3001, Glasgow, G81 2DT
0870 010 0583
Experian – http://www.experian.co.uk
PO Box 8000, Nottingham NG51 5GX
0870 241 6212
Callcredit – http://www.callcredit.co.uk
PO Box 491, Leeds LS1 5XX
0870 060 1414
Consumers may check their credit online at the above web sites–the cost of which range from £9 to £15–depending on which services you elect to purchase. When checking a personal credit file online, a consumer will typically be asked to enter the following information:
- Full name
- Postcode
- Age
- Telephone
- Marital status
- Time at present residence
- Residential status (house owner, flat owner, tenant furnished, tenant unfurnished, et cetera)
- Time with bank
- How many credit cards they currently hold
- The current status of credit card accounts
- If there are any court judgements
To improve a credit score rating, a consumer needs to do the following:
Keep open accounts and their respective balances to a minimum. The more outstanding balances that are reported, the less credit worthy an individual becomes; even if there are few accounts with high balances.
Pay on time, every time. Credit is built on keeping with the contract, in fact, that’s what credit really is, an individual making good on a promise on a regular basis for as long as the account remains open.
Avoid too many inquiries. If shopping about for finance, ask the company if they will provide a quotation before they run a formal credit check. Should the company need to execute a credit check to provide a quotation, ask if it is a quotation search or a formal check. Too many applications will have a negative affect on a consumer’s credit file. Should a consumer seek finance with multiple applications, it may appear to credit reporting agencies as an attempt of identity theft or fraud.
Report any inaccuracies. Credit bureaus are notorious for credit file errors and they are not easily removed. A consumer finding errors on their credit file should alert the credit agency from which the report was taken and follow-up to ensure the error has been removed.
