Your credit report. You know it’s important – you’ve heard it enough after all – but until people actually look at one they rarely understand what lenders see. And if their credit rating – that pesky numerical value that seems to hold some much weight for so many reasons – is less than ideal they often don’t even want to know.
Whether you like it or not though if you are an adult you have a credit report. More than one actually as the UK is served by more than one credit reporting service. And as is the case for many other things in life, what you don’t know could hurt you.
So, what’s really on there? And how much does it matter? Let’s take a look.
Your Personal Information
One of the most important things lenders want to know from the start is that the person they are dealing with is actually who they say they are. While it probably won’t be the only tool they use to determine that pulling your credit report is very helpful, as it should be able to tell them all of the following:
- Your legal name
- Your date of birth
- Your current address
- Your previous addresses
- If you are on the Electoral Roll and if so where.
- Your National Insurance number
- Your employment history
Obviously, if you are applying for credit or a loan you’ll be asked to provide all of that information anyway. The credit report is just a way for lenders to check that you are being upfront and honest.
Technically, every form of credit you have ever been granted within the last seven to ten years will be listed on your credit reports. We say technically because some lenders and creditors do not report to all the credit reporting agencies, so one may contain information that another does not.
This information will also be rather detailed in most cases, and is likely to include:
- The type of credit or loan granted
- Who granted it
- When the account was opened
- The amount borrowed, or the amount of credit extended
- An up to date payment history
- The state of the account at the moment (open, closed, paid off etc)
There will also be a list of everyone who has run credit for you over the last two years, including voluntary inquiries (requests you have made) and involuntary inquiries (when a lender or other agency requests your report).
All of this information offers lenders a look at your track record as a borrower, allowing them to make a decision about what kind of risk lending to you presents. If you have had problems in the past, but are now working hard to fix them, all of this can seem a little unfair. But the harder you work at adding positive entries to your credit profile the less the negative ones will matter.
Public Records & Collection History
This is the section of their credit report that many people worry about the most. What’s actually there? Is that time you forgot to pay your Orange bill for a month two years ago really still haunting you? Is that loan you took out with your ex that didn’t get paid on time still causing problems?
The answer is maybe. Usually, the information in the Collection History section will include:
- Unpaid Debts
- Any convictions for financial misdeeds such as fraud
- Recent applications for credit (for example, if you apply for a short-term loan that requires a credit check this will leave a footprint on your credit report for 12 months – whether you are accepted or not)
What If Things Aren’t Right?
Sometimes – actually more often than you might think – people request their credit reports and, in going through them find, often to their horror, that some of the information is not right. And that it seems like that incorrect information is dragging their credit rating down.
If this really is the case, don’t panic. It can all be fixed. It just takes a little time and effort. Credit reporting agencies draw their information from public records, from creditors and other sources like the Electoral Roll. Sometimes that information is outdated and may even be wrong. But they really won’t know that if you don’t tell them.
To have inaccurate information corrected you will have to provide fairly solid evidence of the ‘truth’. That’s why, as annoying and time-consuming as it can be it’s always a good idea to keep your bill receipts and payment records as well as ensure you are registered on the Electoral Roll where you currently live and that all your current creditors have your most up to date contact information.
Finally, and most importantly perhaps, stop being scared of what might be on your credit report and make sure you know. Get into the habit of checking your own credit reports at least once a year. Doing so is easy, only costs a couple of quid at most and could be a big key to a more secure financial future.