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Reports and Credit Ratings

Where and how can I get a Credit Report?

Most lenders share some, if not all of their customer's data with credit reference agencies, so that both bodies can help each other in building up customers credit histories. Any present credit cards, outstanding loans, records of missed or late payments in your name may also be included in credit reports.

The main credit reference agencies who operate in the UK are Callcredit, Equifax, Experian and TransUnion. All of these groups routinely check and update their databases with personal credit information on UK citizens. It is a statutory right for everyone to be able to see their respective credit reports - each credit report is available from each of the agencies either by post or online for a fixed fee.

It currently costs around Ł2 for a full credit report to be sent to you in the post from one of these agencies. You can also order credit reports online direct from each of the companies' websites. Some groups allow you to sign up for their online report services for a free 30-day trial period - you can be clever by signing up, accessing your files and cancelling your account before the 30 days are over, thus getting free access to your credit reports.

Most lenders will say on the FAQs of their sites which of the main credit agencies they take their information from, so do your homework on each lender before applying to them and have the relevant documents to hand when making any calls.

What should I check for on my Report?

It is worth obtaining credit reports from more than one agency, because due to the wealth of the information that all of these groups handle, it is entirely possible that discrepancies could occur; a mis-type could see cards, PIN numbers sent to a previous or incorrect address, if you have been involved in any legal proceedings concerning debt in the past which have been resolved, you need to check to see if credit agencies are aware of this. It is essential to amend any mistakes on address information, which may be a result of you having moved house in the past few years, as this could mean that you will be rated based on someone else's history.

If there is anything on any of your files which need altering, you should write to each agency detailing the error and requesting that it be changed. If it's a simple typing error, such as a capital 'S' being mistaken for a '5', or anything easily provable such as changes to address/contact details , then everything should be cleared up without a fuss and the company will write back to you, informing you that the change(s) have been made. If the issue is slightly more complicated, then you will need to talk to the agency.

What can I do about getting incorrect details changed?

If for whatever reason an agency refuses to change your files, you have the option of adding a 'notice of correction' to your credit file. This is a 200-word statement in which you explain the circumstances surrounding the discrepancy on your credit file - this is worth doing, as it gives you a chance to have your say, and may help you to get a better rating in the future, if a lender reads your comments on the notice and takes them on board.

However, the problem with notices of correction is that some lenders may view a notice of correction as an indicator that the client is likely to be a problem borrower. They are generally cautious of notices because they could contain information which could plausibly be hearsay - if you have proof that can back up your claims, make sure that you include this in the statement.

Attaching a notice of correction will not instantly mean that an application for credit will be declined, it means that it will be delayed until the lender can decide what to make of the information you have provided. Be sure to be clear and to the point when writing any notices of correction, and be sure to include evidence to support your claims - 200 words isn't a lot, so make sure you get it right first time.

Should I obtain credit reports from more than one agency?

Lenders will have a number of reasons for refusing you credit, but under the Data Protection Act, you are entitled to ask for the reasons why, and you can ask for your application to be reviewed - because of this, it is essential that you have as much information available to you as possible. A lender might base their decision on data obtained from just one agency, data which could be incorrect. If you have documents and figures from other agencies to hand, you can easily refute any mistakes, if a refusal of credit is based on wrong information.

Top tips on improving your credit rating

Check your records

Check your credit records before you make an application. If you apply and get falsely rejected due to a clerical error, the rejection will be noted on any future credit reports, which can be detrimental to any further applications. A quick review of your credit records is well worth your time, as it means you could potentially avoid getting stuck in a vicious circle of rejections, which will only frustrate your attempts to borrow in the future.

Stay at home

Home owners in full-time employment are good risk clients, and thus tend to score highly. Putting down a landline number as opposed to a mobile phone number on your application form helps too. As moving house means a lot of paperwork for you, it means a lot of paperwork for lenders and credit report groups too. Therefore it is important to make credit applications before you make the big move. Also, as credit reports are based on electoral roll information, make sure you are on it and eligible to vote.

Cancel dormant cards

If you already have access to a number of cards, some lenders may refuse to lend you any more on the grounds that you have 'too much' available credit, even if your cards aren't used frequently or at all. If you have a range of unused credit cards, cancel the ones you don't use frequently in order to improve your rating.

Time your applications

Applying for credit, loans, insurance in a short space of time can lower your score, as this creates the impression that you are spreading your finances across a large area - lenders don't like this as it is hard for them to predict your moves. Space out separate applications so as not to bring your rating down.

Raise your profile

As most credit scoring systems are based upon looking at your spending habits and predicting trends, the best way to build or improve your credit history is to act predictably. Keeping up with repayments regularly, even if you struggle to make each monthly payment, will go some way in improving your chances of accessing credit later on. One popular rating-boosting tactic involves making small, regular purchases on a credit card which can easily be repaid - doing this over a set period from six months to a year can result in you being offered greater amounts of credit.

Don't be late

Never miss payments, and always try to follow at least the minimum repayment plan for your financial products. Defaulting on payments once or twice will cause big problems that can cost you for years. If you are going to be late with a payment by a few days, it is a good idea to inform your lender, as this can work in your favour. If you can quickly arrange to reschedule a date for a payment which you will be able to make, then this will look better on your credit record than a missed payment.

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