Understanding Credit Reports and Who Looks at Them

Have you ever wondered how a lender decides whether to give you credit? A credit report is an important tool for determining your credit history and assessing the risk of lending to you.

What your credit report shows:

    • Your current credit accounts – this includes your bank and credit card accounts and other current arrangements such as outstanding loan agreements or utility company debts. If you’ve previously made late or missed payments these will be recorded and stay on your credit report for at least 6 years.
    • Relevant details of people who are financially connected to you if you’ve taken out joint credit.
    • Any public record information such as County Court Judgements (CCJ’s), bankruptcies, house repossessions and Individual Voluntary Arrangements (IVA’s). These will also stay on your credit report for at least 6 years.
    • Whether you’re on the electoral register.
    • Your full name and date of birth.
    • Your current and any previously recorded addresses.
    • If you’ve previously committed fraud.

What your credit report doesn’t show:

    • Your salary.
    • Your religion.
    • Your criminal record.

Who looks at my credit report?

When you apply for any type of credit, this will usually involve giving the provider permission to check your credit report to assess your credit history. This can include banks, credit card companies, direct loan lenders but also mobile phone providers, employers and landlords. 

These companies can choose not to lend to you if you haven’t previously managed your credit well. In some cases, the credit provider (such as credit card companies) may offer your alternative options, such as smaller amounts of credit or a higher rate of interest. In these cases, many people have been tempted by “no credit check loans“.

In cases where you’ve been unable to keep to the terms of a credit arrangement and set up a payment plan, this will show on your credit report. However, a payment plan can show that you have taken a positive action towards your account which will clear your outstanding balance quicker and in turn help your overall creditworthiness.

How do I check my credit report?

There are a number of free providers such as ClearScore or Experian.

What if there’s an error on my credit report?

If you spot any errors on your credit report, you should contact the lender directly and explain the situation. Always remember to provide as much evidence as possible to ensure a quick resolution.

How do I improve my credit score?

If your credit score isn’t in the best shape, there are a number of ways you can improve it.

Your first step should be to ensure that there are no errors on your credit report (above).

You can then:

    • Pay your bills on time to show you manage your finances effectively.
    • Avoid CCJ’s – if you’re having debt problems you can seek free advice.
    • Reduce your existing debts by paying off credit cards and overdrafts.

For more information, take a look at our 5 Ways to Build Your Credit Score guide.

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