What Exactly Is A Credit File, And How Does it Affect You?

You may have heard before that your credit file is important and that “you should really check your credit score more often”, but why? What makes your credit score so important, and how does it affect you? We’ll lay it all out for you.

piggy credit

What is a credit File?

A credit file is made up of all of the credit that you’ve taken out in the last six years. This includes information supplied by banks, building societies and even payday loan direct lenders such as ourselves. It demonstrates whether you’ve paid back your debts on time so that other creditors can decide how risky it is to lend you money.

Everyone has their own individual file, and you can check yours for free at Experian.

What Information Does It Have On it?

A lot of information is held on your credit file: such as your name, date of birth, and current and previous addresses. It also holds information from bank accounts in your name and any loans you’ve agreed to.

This includes:

  • Any past missed payments: this could be an unpaid balance on your credit card, missed rent, or failure to pay a monthly bill
  • Defaulted accounts
  • Any current debts – including credit card balances, payday loans and phone bills.
  • Court Judgements against you
  • If you’ve been made bankrupt or insolvent
  • If you’re on the electoral roll


How Does It Affect You?

By using the above information you are given a credit score. The higher your credit score, the better. Think of a credit score like a test: the more marks you get, the better your chances are of getting what you want. When you have a good credit score, it means judging by your credit history, you have a high probability that you will repay the loan within the stipulated time.

Therefore, if you intend to get a loan at some point, especially from institutions like banks, you need to work towards having a good credit score. A good credit score is, therefore, something that will make lenders trust you that much more.

This can even affect applying for a mortgage and rented property too.

Essential to note is that in most cases, different lenders calculate credit scores on their own. In other words, they make their own calculations. As a result, you might end up having different credit scores for different lenders. Though there are some lenders who offer “no credit check loans“,  it may be better, in the long run, to work on improving your credit score as “no credit check loans” are likely to charge higher interest rates.

All that matters is that all your credit score remains as good as it can possibly be.

Discover these tips and tricks to improve your credit score!