Seen Facebook ads about writing off debt? Get the facts first!
Have you seen ads on Facebook promising to write off your debt?...
Do you worry about your credit score? Are you confused by people talking about their credit report? You’re not alone. Dealing with debts, and understanding your credit report can be daunting, but we’re here to help.
We’ll explain how you can get your credit report, what’s on and it and why your credit score is important so that you can feel confident about dealing with your finances.
Your credit report is a summary of your financial history provided by a credit reference agency (CRA). These organisations keep financial information about nearly every adult in the UK.
These agencies share information about people’s credit history to lenders such as banks, credit card companies or mortgage providers, to help them decide whether or not they should lend money to you.
There are three main agencies in the UK you can request your credit report from. In no particular order these are:
Experian
Free credit score access available on their website, full report free via the MSE Credit Club
Equifax
Free access available via ClearScore
Callcredit
Free access available via credit karma
You’re legally entitled to a copy of your full credit report from each agency, it costs £2 where it is not provided free of charge.
To get a full picture of your credit history we’d recommend that you get a report from all three, as the reports can differ between agencies. The CRA will request your full name, current address, and any addresses you’ve lived at over the last six years.
Your credit report contains a range of personal information, including:
It also contains details of any debts you have such as:
It also contains information supplied by the Insolvency Service and Registry Trust, showing if you’re subject to any of the following debt solutions:
England, Wales or Northern Ireland:
Scotland:
In all countries any bankruptcy restriction orders or undertakings will also be shown.
It also shows court judgments where a lender or other organisation has taken you to court, including:
Each of the debts included in your creditor report will show some or all of the following information:
For closed accounts, whether the debt is:
As a general rule, information on your credit file is removed after six years, however there are a few exceptions to be aware of.
If you review your credit report and find that there are errors, you can contact the CRA or the lender involved to have incorrect information corrected or removed. This is important because mistakes on your report could prevent you from being able to obtain credit.
You may be able to remove:
If you think that you may have been the victim of fraud, contact the police or Action Fraud and inform the CRA and the lender.
To remove a financial connection you’ll need to fill out a ‘notice of disassociation’ available from your CRA.
You can also ask the CRA to add a notice to your credit report of up to 200 words long which potential lenders will see. This notice can explain the cause of your debt, or explain to a lender why the information on your credit file may be misleading.
Usually, credit decisions are made automatically but adding a note means that your credit decision will be made by a person instead.
Each CRA can provide you with what’s known as your ‘credit score’. The lower this number is, then the higher you are considered a ‘credit risk’ and lenders may be less likely to give you credit.
The number is just a guide that CRAs give you, but it’s not used by lenders when they’re making their decisions about whether or not they should lend money to you. They use the information they get from CRAs and apply their own criteria to make their decisions, and they don’t make these criteria public.
However, you can use you credit score as a rough guide to how likely the CRA thinks that companies will lend to you.
If you’ve had trouble repaying debts in the past, and you’re thinking of applying for credit such as a mortgage you may want to improve your credit score, to lessen the chance of being refused credit and increase your chances of obtaining a better rate of interest.
The first step is to obtain your credit report and make sure that all the information held about you is correct. Make sure you’re on the electoral register, and keep your household utility bills up to date. Don’t have too many separate cards or accounts – if you have a lot, especially ones you don’t use any more, consider closing some of them.
Taking out a small amount of credit and repaying it on time may improve your creditor rating by showing you can use credit responsibly, A good example of this is getting a credit card with a small limit, spending on it and clearing the balance straight away.
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