Credit Reference File and Credit Repair
Everyone’s financial activities are stored in what’s known as a credit file, and it’s this file that credit providers refer to when they are assessing your credit-worthiness.
How do lenders decide who to lend to?
A credit reference file is kept by authorised companies and contains details of all your financial history regarding credit applications and of credit you have borrowed. Creditors check your file when they are considering giving you credit.
There is no such thing as a ‘blacklist’
So how do creditors decide who to lend money to?
All creditors use their own ‘credit scoring criteria’, by allocating points for various pieces of information, and the level of risk. You are then given a “score” and the lender will use this to decide if you are an acceptable risk.
Details that the creditors may look at to give you a credit score include:
- Personal details
- Employment status
- Your credit file
- Your Income
- Bank details
- Mortgaged or rented accommodation
Best ways of obtaining your Credit File
To ensure your details are correct you have the right to request a copy of your Credit File under section 7 of the data Protection Act 1998. The easiest way is to request your Credit Reference File is online (Equifax or Experian) or by phone which may incur a fee of £5 to £15. This can be possible when you have a credit or debit card in your own name. Alternatively you can write enclosing a cheque for £2 payable to either of the 3 credit reference agencies.
In order to obtain your credit file they will require details of your full name, date of birth, current address and any addresses you have had in the last six years. You then should receive a copy of your file within seven working days.
What to do if I think my Credit File contains inaccurate information?
Details of how to correct any mistakes on your Credit File will be sent with a copy of your file. If you have any difficulties in accessing your file or making amendments, further assistance is available from your local Trading Standards Department.
The Office of the Information Commissioner has responsibility for credit reference agencies and produces a leaflet “No Credit?” on how to consult your credit record and correct any mistakes. You can order copies of it by phoning 0870 44 21 211.
What happens if you are refused credit?
If you have been refused credit you will be advised to contact the credit reference agency requesting a copy of your credit file. Lenders work on a scoring system so they don’t have access to the reasons why you are refused credit. Remember no one is entitled to credit.
Can I repair my Credit File?
Credit repair companies falsely claim they can repair your credit file and can have County Court Judgments or any other records removed. You cannot repair your credit file as such as all records will remain on your file for 6 years from when they were first registered.
If you obtain your credit file and find there is inaccurate information registered, then you will need to contact the credit reference agency and request them to look into it.
Ways to improve your Credit File
There are ways to improve your credit rating and increase the possibility of creditors lending to you.
To help improve your credit file you are allowed to insert a statement of up to 200 words onto your credit file to explain previous and/or current circumstances. When creditors search your file they will see this statement and this may influence their decision to lend you credit.
Other methods include:
- Confirm you are on the electoral register; lenders will use this to confirm your name and address.
- Make sure anyone who is financial linked to you pays their creditors on time, as lenders will look at this information when considering giving you credit.
- Don’t keep making applications for credit as it may look like you are desperate for money or even look like you are trying to commit fraud. To prevent this it is best to compare companies by rates and quotations without actually completing a full application with each.
For immediate and free debt advice please call PayPlan free on 0800 316 1833or use our Debt Help Form to submit your debt problem online.