Your Credit Rating and How To Check It

There is a lot of confusion surrounding UK credit ratings, credit scores, credit blacklists, credit reports, and credit files. This guide to your credit rating aims to give you the facts you need.

What's in a Credit File

There are two major credit reference agencies in the UK, Equifax and Experian, who maintain credit files on virtually every adult in the country.

Almost all companies that give you credit terms will supply information to one or both of these two credit agencies.

Therefore, your credit file is likely to contain information on all your existing credit and loan arrangements, such as personal loans, mortgages, credit and store cards, bank accounts, etc. In addition, your credit record will contain information on any late or missed payments and the amount of the original debt still outstanding.

The credit reference agency files also contain electoral roll information for your address and court records relating to you. It is this information which allows prospective lenders to confirm your address and also see if you have any outstanding CCJs (County Court Judgements).

Whenever a mortgage lender or other company is assessing an application for credit, they will check the details held on you by Equifax and/or Experian. The reason they do this is because, by law, they are not allowed to request any information about you from any other companies with whom you have a credit agreement.

Also, by contacting one of these two agencies they can gain access to your entire credit history with just a single request rather than having to gather the information from multiple sources.

Each time a lender makes a search of your credit file, that search will be recorded and added to your file, leaving a credit check "footprint". Therefore, it is easy for a prospective lender to see if someone has been "shopping around" for credit, and this in itself could be a deciding factor in whether or not they agree to give you a mortgage.

Your credit file will also include details of other people living at your address if they are financially linked to you, or if the credit reference agencies think they are financially linked to you. In this way, other people's bad credit history can sometimes drag down your credit score. But if you find you are wrongly linked to another individual, you can write to Experian and Equifax and ask them to correct the mistake.

How can I see my credit file and correct any mistakes?

Under the terms of the Data Protection Act, the credit reference agencies Equifax and Experian are required to provide you with a copy of the information they hold on you in return for a small administration fee. At the time of writing (2004) the fee for each agency is ?2.

Your details are supplied by post, but you can request a copy of your file by telephone, post or email. Details or how to apply can be found on the Equifax and Experian websites.

Remember that because some companies supply information to Equifax, some to Experian, and some to both, you will need to order copies of your file from both agencies in order to get a full picture of your credit record.

Alternatively, there are online services that will allow you to undergo a free credit score check, as well as download (for a fee) a copy of your full credit report.

If, after having obtained a copy of your credit file, you find that it contains errors, you can take the matter up with Equifax and/or Experian and ask them to correct the mistakes. Full details of the procedure for correcting your file are available on the companies' websites and are also sent in the post along with the copy of your credit file.

Credit scores, credit ratings, and credit blacklists

First of all, let's dispel a popular myth.

A lot of people think that there is a "blacklist" you can end up on if you have a particularly poor credit history, and that if you are on this list you will automatically be refused credit.

This is simply not true - there is no such thing as a credit blacklist. If you have been refused a mortgage or other form of credit, the reason will be because your credit score was not high enough.

When a lender requests information about you from a credit reference agency, they apply a mathematical formula to that information in order to give you a credit score. Different lenders will use slightly different factors to create the score.

Also, the definition of a good or acceptable score will vary from one mortgage lender to another. Therefore, it is quite possible to be turned down by one lender but be accepted for a mortgage by another.

Given that you are potentially worsening your credit score every time you approach a lender about a mortgage and they run a credit check on you, and given that different lenders will have different criteria for assessing your credit worthiness, it makes sense to talk to the experts right from the start if you are looking to take out a mortgage but suspect you may be hampered by a poor credit record.

If you're worried that a poor credit record may affect your ability to obtain a mortgage or remortgage, you should take the time to find a mortgage adviser who specialises in finding mortgages and remortgages for people with credit problems.

------

Copyright 2004 David Miles. You are welcome to reproduce this article on your website, so long as it is published "as is" (unedited) and with the author's bio paragraph (resource box) and copyright information included. In addition, all links to external websites must be left in place.

David Miles is the editor of Clean Slate Mortgages - a website dedicated to helping people with credit problems obtain a mortgage or remortgage. The site also contains articles on debt consolidation, credit cards, and loans.

10 Simple Steps to Manage Your Credit

By far the greatest invention the banks have ever come up with came out in... Read More

Free Credit Report ? Watch Out for Scams

Many people may still not be aware of an amendment to the Fair Credit Reporting... Read More

Identity Theft ? Additional Protection for Soldiers on Active Duty

Congress passed the Fair Credit Reporting Act several years ago in an attempt to smooth... Read More

Free Credit Reports - How to Maintain Your Credit Profile

Maintaining your Credit ProfileEvery consumer should be maintaining their credit profiles to ensure the highest... Read More

Practical Suggestions for Protecting Yourself From Identity Theft

It's no surprise that thousands of Americans are victimized by identity theft each year. Last... Read More

Maximizing Credit Card Rewards

We spend money every single day on many different types of products and services and... Read More

Credit Reports ? Why Your Credit Score is Important

If you have never heard of a FICO score before, you should become familiar with... Read More

Credit Cards: What is the Universal Default Clause?

Most people who carry major credit cards are well aware that the interest rates associated... Read More

Secured Credit Cards- Consumer Tips

Whether you have no credit or damaged credit, secured credit cards are a good tool... Read More

How To Avoid Becoming A Victim of Identity Theft

With identity theft statistics currently at an all time high, and climbing, it just makes... Read More

Credit cards

If gold medals were awarded for marketing consistency, the credit card industry would be... Read More

How to Save Money on Your Credit Cards

Credit card companies make their money on the 85% of us who fail to pay... Read More

Which Credit Bureau Should I Use To Check My Credit Report?

There are three main credit bureaus in the United States; Equifax, Experian and Trans Union.... Read More

The Three Largest Factors In Your Interest Rate

There are three major factors that affect how much you pay for a loan. Understanding... Read More

7 Surefire Ways To Repair Bad Credit

Do you have a poor credit rating? If so, you are one of tens of... Read More

Trade Credit: How to Determine if You Should Offer Net-30 Terms to Your Customers

What is trade credit?One of the major differences between consumer and commercial transactions is that... Read More

Your Credit Rating and How To Check It

There is a lot of confusion surrounding UK credit ratings, credit scores, credit blacklists, credit... Read More

How Credit Scoring Works

The all important credit score! It determines the amount of loan you can get, it... Read More

Credit Establishment 101

There will come a day when you need credit. You may want to buy a... Read More

Commercial Collections: Business Finance Booster Shot

Commercial collections: fixture of the new B2B cultureIf you're in the business-to-business field, or even... Read More

Figuring Out the Ever Nebulous Numbers Called Credit Scores

Credit Score FactorsThe information contained on our credit reports affect every aspect of our lives;... Read More

Credit Enhancements: Seven Tips For Enhancing Business Credit Transactions

What are the avenues available to businesses with weak credit profiles or to companies pursuing... Read More

Choosing the Best Low Interest Credit Card

With so many low interest credit cards on offer, how do you know which one... Read More

7 Consumer Credit Laws You Should Know if You are Trying to Repair Your Credit

There are seven consumer credit laws you should be aware when dealing with your credit.1.... Read More

Credit Card Entrapment - The Secrets are Out

Have you ever wondered why your credit card bill is so high and you can't... Read More

How To Eliminate Credit Card Debt

There is almost nothing more troublesome than having too much debt to pay each month.... Read More

Debit Card vs. Credit Card, What Are The Differences ?

Ah, the "good old days". If you are a baby boomer, like me, then you... Read More

What You Didnt Know About Your Credit Card Numbers

Have you ever really looked at your credit card and tried to figure out what... Read More

How Do I Establish A Good Line of Credit?

A line of credit, roughly defined, is the amount of credit that can be given... Read More

The Art of Stoozing to Make Money from Credit Cards

Make Money from StoozingStoozing, this is a sophisticated method of making money from credit cards... Read More

A No-Brainer Way Of Getting Credit And Credit Cards

What Is Your Credit Rating Now?If you have any charge accounts now, or have ever... Read More

Identity Theft : They Got Him

His hard earned money? Gone. Creditors on his back everyday. Police knocking on his door.... Read More

FREE Credit Report Offer - Careful, It Might Carry Hidden Charges

FREE credit checks or free credit reports. What are they all about? Why every second... Read More

Give Yourself Credit

The Beginning of the Credit Card EraIn 1951, Diners Club issued the first credit card... Read More

Credit Card Security Advice

Which of the following is the biggest threat to your credit card security?a) Shopping online... Read More

Making Sense of Credit Card Fees

In addition to the APR (annual percentage rate) and the finance charges, most credit cards... Read More

How to Evaluate and Raise Your Credit Score

Why do some people get offers for pre-approved credit cards and others don't? What do... Read More

Addressing Bad Credit Card Debt

Spending HabitsSo you've just got your credit card. The first thing you need to be... Read More

Credit Report ? How to Improve Your Credit Score

One of the great mysteries of life is how the three major credit bureaus (Experian,... Read More

Like It Or Not, You Have A Score To Settle!

Like It Or Not, You Have A Score To Settle! (Part 1 of 2 on... Read More

Easing Your Financial Burdens With Credit Counseling

It is a well-publicized fact that more of us are getting ourselves into greater debt,... Read More

Save Money and Lower your Payments by Improving or Repairing Your Credit

Having a better credit score not only represents easier access to money from lending institutions,... Read More

Preventing Credit Card Mess

Credit card debts problem is extremely common today. It is usually the first sign of... Read More

Two Things You Need To Know About Prepaid Debit Cards

According to the September 2004 issue of the Nilson Report, around $588 billion dollars worth... Read More

What You Should Know About Credit Counseling

Credit counseling is a free service that many people with money problems have turned to... Read More

What Should I Do If I?ve Become a Victim of Identity Theft?

Identity thieves take advantage of everyday opportunities to discover your personal information and use it... Read More

How Healthy Is Your Credit

There's only one way to discover the "health" of your credit. You need to examine... Read More

Low Interest Credit Cards Have Many Advantages

When credit cards are used wisely they can be very beneficial to the consumer. A... Read More

ChexSystems: Alternative Options for People Whove Been Checking Accounts

Individual banks elect to become members of ChexSystems, and to use their services.Those individual banks... Read More

Can Credit Search Entries Affect Your Ability to get Approved for a New Loan in the UK?

About Search Entries:Every time a lender checks your credit history from your credit file (i.e.... Read More