Summary
- Your credit report holds information from lenders and The Public Record
- CIFAS is here to protect you
- You cannot run away from debt
- Incorrect information on your report can always be fixed
- Lenders are looking for specific things – we tell you what they are
Only 5% of us have seen our credit report in the past year
Your credit report is an official record of your current address and details of the repayment history for credit cards, loans and mortgages held now or paid off in the past six years. Your credit report is compiled and held securely by credit reference agencies and shows whether you have made repayments on time, let them build up or defaulted on a debt.
In addition to your repayment history, your credit report includes a record of any court judgments against you over the last six years. It shows whether you are on the electoral register and lists the names of your financial associates – anybody with whom you share a relevant account, such as a joint mortgage. Most of this information is contributed by lenders, while some, such as court judgments, bankruptcies and electoral roll information, is held on publicly-accessible registers.
The better you understand your credit report, the more likely it is that you’ll be able to improve your credit score and get the best deals on any financial products you need
According to recent research, only 5% of us have seen our credit reports in the past year. But knowing how your credit report works, checking it regularly and, if necessary, working to improve it, are all crucial aspects of financial empowerment. A strong credit report can make your life a lot easier, as, through a process called credit scoring, the contents of your credit report affect whether or not you are given credit, such as loans, credit cards and mortgages.
Credit scoring involves building a score based upon the details provided by you on the application form and the information held on your credit report. This score assesses the risk you present as a borrower. Different companies take different information into account, so your application may be accepted by one company but declined by another.
Credit agencies keep a record of settled accounts for six years from the date you paid off that account
On your credit report: information from lenders
Credit reference agencies hold information about credit accounts for six years. Lenders provide this information, which can help identify good payers as well as bad payers. Credit accounts can be classed as settled, active, defaulted or delinquent:
A settled account is one where you have repaid your credit. Credit agencies keep a record of settled accounts for six years from the date you paid off all amounts owed to that account. The payment history shown on your report will relate to the period before you repaid your credit.
An active account is one which you are still using. Agencies keep a record of these accounts until they are settled and then for six years afterwards.
A defaulted account is one where you have not kept to a credit agreement. Agencies keep a record of these for six years from the date you broke the relevant term of the credit agreement. The record will show how much money you still owe. If you have paid off everything you owe since you broke the credit agreement, the account will be shown to be ‘satisfied’ at the balance.
A delinquent account is one 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.
Credit accounts can include your payment record over up to 36 months
How to read the accounts section of your credit report
Every record of a credit account will include a status history showing whether or not payments have been made on time. Credit accounts can include your payment record over up to 36 months. The most recent payment is shown as the first entry. The last 12 months’ payments are shown, and underneath there is a summary of the payment history over a period of up to 36 months (unless the status history shown is ‘8’). In the summary, the entries 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.
Electoral roll entries show your address, the name of your local authority, the names of the people registered to vote at that address and the dates those people were registered
On your credit report: The Public Record
The electoral roll is published each December using information the public has supplied to local authorities. Electoral roll entries on your credit report show your address, the name of your local authority, the names of the people registered to vote at that address and the dates those people were registered. Credit reference agencies use this information to update their records every year, so if this information changes you should tell your local authority to ensure your credit report reflects this.
Any court judgments are held on your credit report for six years from the date of the judgment. Judgments that are paid within one month are removed from your records as long as a Certificate of Satisfaction has been issued by the court. Judgments paid after one month are kept on report but marked as ‘satisfied’ once a Certificate has been issued by the court. If you have been declared bankrupt, credit reference agencies will obtain this information from the official gazettes. It is kept on your report for six years after the date of the bankruptcy order.
Your previous addresses may be listed on your credit report
On your credit report: other information
If your report specifies ‘unrecorded enquiries’, this shows that a company has searched your report for non-lending purposes. This information is shown only to you, not to lenders searching your report in order to make a lending decision. Lenders may also search your report to give you a credit quotation. These are recorded as quotation searches so other lenders do not mistake them for credit applications.
Your previous addresses, or any addresses you may use for correspondence, may be listed on your credit report. These links are created by account information moving between addresses. Your credit report will show the addresses that are linked, how the link was created, and the date and source of the link. The link will be broken when agencies are asked to do so by the organisation that created the link.
Organisations who are members of CIFAS will not automatically refuse applications from people with warnings on their report
CIFAS
CIFAS is a system developed in consultation with the Office of Fair Trading and the Office of the Information Commissioner. It aims to detect and prevent fraud, and so protect innocent people whose names, addresses or other details are used fraudulently by others in order to get credit. When a CIFAS member identifies a fraud, a warning is placed against the name, address or details used in or otherwise associated with the fraud. The text of the warning says ‘CIFAS – Do Not Reject – Refer for Validation’.
A CIFAS warning on your report does not mean you are or have been accused of fraud. It means extra precautions should be taken to ensure the application that has prompted the check of the name or address in question is genuine, protecting that name or address from misuse. Organisations who are members of CIFAS examine credit applications very carefully, and may contact you to make sure you have applied for the credit. They will not automatically refuse applications from people with warnings on their report.
GAIN - Gone Away Information Network
Credit reference agencies are members of GAIN, a network through which lenders share information on customers with debts who have moved home without telling their lenders of a forwarding address. The information may include both the address the customer moved from and any address the customer has since been recorded as living at.
You must be shown all the information that is available to lenders, whether or not they use it
Information about other people
Your file may include financial information about members of your family who live, or have lived, with you. Lenders can take this information into account when assessing an application you make for credit. By law this information must be included on your credit file because you must be shown all the information that is available to lenders, whether or not they use it.
The rules on using information about other people are changing and, in the future, financial information about other people will not be included on your file. After these changes have been made, only your own credit history, and that of anyone you share a financial responsibility with, will be provided to a lender.
Lenders like somebody who has paid back a number of different forms of credit, such as a credit card, a mortgage or a loan, over time
What lenders are looking for
Lenders want to see you can repay what you owe, which can be a problem if you’ve never had to borrow. While lenders don't favour people with large debts or a record of missed payments, they like somebody who has paid back a number of different forms of credit, such as a credit card, a mortgage or a loan, over time. Thus, people with a spotty credit history may struggle to get the finance they want or have to pay higher interest rates. Equally, if you have little or no record of repaying credit, lenders do not have enough information on which to base an offer and they therefore don't know how creditworthy you are.
People who have avoided borrowing, regardless of how affluent they are, may struggle to get credit as lenders cannot work out what kind of risk they represent
Some groups of people may have less of a credit record than others
People under 30 carry the highest burden of debt, but because almost half of this debt is accounted for by student loans that are not shown on credit reports, they may have a relatively sparse formal repayment record. Likewise, people who have avoided borrowing, regardless of how affluent they are, may struggle to get credit as lenders cannot work out what kind of risk they represent.
Stay-at-home mothers are another group who can suffer if most of the credit history is in their partners’ names, as without so much as an independent credit card account to go on, lenders are likely to be cautious. This can be a problem if a relationship flounders and the woman needs access to credit in her own right for the first time in years.
Lenders check local electoral registers to verify that you are who you say you are
How to correct the information on your credit report
Borrowing and search history
If a credit account has been paid but this is not shown on your credit report, contact the company concerned and ask them to make the necessary changes. If companies have searched your credit report more than once in response to one application, ask them to make the necessary amendments.
The electoral roll
If your name is not registered on the Electoral Roll, contact your Local Authority and request that they add it. Credit reference agencies will then amend the details once notified by yourself or the relevant Local Authority.
Court judgments
If you have paid a County Court Judgment, make sure that it is shown as satisfied on your credit report. If it is not, contact the County Court and obtain a Certificate of Satisfaction. All credit reference agencies will be notified of the change within four weeks. If you believe a judgment has been incorrectly registered, contact the court in question.
If you have paid a Scottish Decree, send the Registry Trust a receipt or a letter from your creditor to confirm your payment, as well as a cheque for £4.50 to cover their search fee. They will then tell the credit reference agencies about any change to your report:
Registry Trust Ltd.
173-175 Cleveland Street
London W1P 5PE
For judgments made in Northern Ireland, contact the court concerned if you have any questions about the accuracy of a judgment recorded on your report.
Financial associates
If you have been linked to addresses with which you have no connection, contact the companies who created the links and ask for the links to be deleted. If you have separated from a spouse or partner, make sure he or she is no longer listed as a financial associate as soon as your affairs have been disentangled.
If your credit report shows names you have never used, contact the company listed as providing the other name and they will investigate the matter and make any necessary changes to your report. Most importantly, if your credit report lists any applications or loans you do not recognise, contact Experian immediately, as this could mean you have been the victim of identity fraud.
Bankruptcy Orders and Individual Voluntary Agreements
If a Bankruptcy Order has been discharged or annulled and this fact is not shown on your credit report, send a copy of the Order of Discharge or Annulment to all Credit Reference Agencies and ask for your report to be updated. Any questions about records relating to an Individual Voluntary Agreement (IVA) should be sent to the supervisor who dealt with your case.
Explaining the information on your credit report
You can add an explanation or Notice of Correction to the information on your credit report, for example, the reasons why an account fell into arrears at a particular time. The Notice will be shown to any future lender who sees the entry to which it relates. If you have any trouble correcting the information on your credit record, contact CreditExpert for help setting the record straight.
A high number of footprints on your credit report could affect future applications
What to do if you’ve been refused credit
If you have been declined for credit, be warned that your credit report will not state the reason why you have been declined, although looking at it may give you a clue. If the decision was based upon your credit report, the lender may tell you the name and address of the credit reference agency they used.
A caution for people who have been declined credit: avoid making repeated applications for credit right away. Each application is likely to result in a search of your credit report which will be registered and possibly result in a high number of footprints on your credit report, which could affect future applications. There are several steps you can take to improve your credit rating, but finding out what’s actually on your report is definitely the first.
Published on: 9 July 2007
