How to Understand Your Credit File

This file is kept by credit reference agencies, and all the financial information it holds about you is confidential. The agencies release this information only to bona fide enquirers who have genuine need for the information, such as potential lenders. An enquirer must also be registered with the Information Commissioner and the Office of Fair Trading.

The agencies get information about you from public records such as the electoral roll, Official Gazettes and the Register of County Court Judgements, as well as from trade bodies like the Council of Mortgage Lenders. They also get information about you from any lending companies or banks that have given you loans. You may be surprised at how much information your credit file contains: it will show all your current loans, some past loans within a certain period, how many credit cards you have, what your credit limits are, and if you have made any late payments. It will also record any credit searches by lending companies over the previous two years.

Whenever you apply for a loan, credit card or a bank statement mortgage, the lending company will check your credit file with one of these agencies. If your credit file contains a bad mark against you – for example, an unpaid debt or late payments – you may well find that your application for credit is refused. Your credit file is therefore very important and can have a big effect on your life. If you decide to buy a home, for example, and need private real estate loans, your credit file can make or break your purchase, depending on the information it contains.

If you have made an arrangement to pay reduced instalments to any of your creditors, a note will be made on your credit file, which may affect your ability to get credit until the situation is resolved. However, if you are having trouble paying off the debts you already have, the last thing you should be doing is trying to get more credit.

The good news is that, after six years, any adverse credit information – even bankruptcy – is deleted from your file. The other piece of good news is that, under the Consumer Credit Act 1974, you have a right to see all the information kept about you. If you write to the credit reference agencies, they must by law send a copy of your file to you.

If you would like to see a copy of your credit file – and I recommend that you do so – the three credit reference agencies to approach currently are Equifax, Experian and Callcredit pic. However, agencies have been known to change, so for an up-to-date list, contact your local Citizens Advice Bureau. And remember, even the most efficiently run organisation can make mistakes, and errors have been known to appear in credit files. For example, your financial details may have been linked with someone unconnected with you but who shares the same surname. So even if you think you have no black marks against you, it is worth checking your credit file periodically, just to make sure.

Some organisations send your financial data to one agency only, or to two or three on an irregular basis. Each agency may therefore have different information about you on its files. The only way to be sure that you get all the information is to get a copy of your file from all the agencies.

Filed Under: General How To's


About the Author: Marie Mayle is a contributor to the MegaHowTo team, writer, and entrepreneur based in California USA. She holds a degree in Business Administration. She loves to write about business and finance issues and how to tackle them.

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