If you’re new to credit, you may not understand the significance of a credit file. You might also be unclear of the difference between a credit file and a credit score. In this guide, we’ve looked at the basics of credit reports, so you can get a better understanding of exactly what they entail!

What is a Credit Report?

Your credit report, or credit file, is a document that contains information about your financial history. This information is taken from the last six years, and includes things like your mortgage, loans and credit cards. The purpose of your credit report is to show third parties, such as lenders, how you manage your money. They can then make a more informed decision about whether it’s risky to lend to you.

The details on your credit file can also be used to calculate your credit score, which is an easy reference point for credit providers. If you have a low credit rating, certain loan providers may be less likely to lend to you. You can look at the information on your credit report to understand what could be affecting your score, and see if there’s anything you can do to improve it.

What Information is On Your Credit Report?

In terms of what you can find on your credit report, the main thing is your credit history, which is a summary of your credit accounts, as well as how you’ve managed them. The payment status of these accounts will also be recorded, such as missed or late payments. Insolvencies and bankruptcies can be found here too.

Your credit file furthermore contains a list of your financial connections. These are people you’re linked to financially – this could include a joint bank account or mortgage. In addition to this, personal information, like your full name, address, and date of birth will be recorded on your credit report.

How Can You Access Your Credit File?

If you do wish to look at your credit report, separate copies will be held by the UK’s three main credit reference agencies. These are Experian, Equifax and Transunion. You can easily request a copy of your credit file from any of these agencies, though bear in mind that there may be a small fee.

It’s also worth noting that these credit reference agencies offer guidance and tips on improving your credit score. Their websites have a wealth of information on boosting your rating and increasing your chances of being accepted for credit applications.

Does Checking Your Credit Report Impact Your Score?

When a lender looks at your credit file, this can leave a footprint, which may affect your credit score. Some people therefore worry that when they check their own report, their score will be impacted. You can rest assured that this is not the case.

When you request to see your own information, you don’t affect your credit rating. In these cases, a ‘soft search’ is carried out, which won’t be visible to other organisations when they look at your credit file.

What is Your Credit File Used For?

What is the purpose of storing information about your credit history? Who uses these details? The simple answer is that lenders will look at your credit report, in order to gain insight into your financial behaviour. They’ll also consider your credit application, as well as any records they have, when making a lending decision, but your credit rating plays a big part in this.

So whether you’re looking to get a mortgage, or take out a credit card or loan, you need to remember that the lender will be checking your credit report. And if you want to improve your chances of application approval, you should probably get to know your credit file, make sure it’s in good shape, and work to improve your rating.

Credit File vs Credit Score

As outlined above, your credit file is a document that contains details about your financial behaviour over the last six years. Your credit report may vary slightly depending on the credit reference agency it’s kept by, but it will largely have the same information. On the other hand, your credit score will vary depending on the lender looking at your credit report. 

Your credit rating is a number that lenders calculate using your credit file, and any other information you supply at the time of application. This score will represent your credit history. It helps indicate the type of borrower you are, and the likelihood that you’ll be able to keep to your repayments.

A high credit score is considered to be better than low one, and this will improve your chances of loan approval, and can mean you’re offered better interest rates. Essentially, a higher score means lower risk for the lender. If you do have a low credit rating though, don’t give up! There are plenty of ways you can boost your score – check out our blog post on ‘5 Tips To Improve Your Credit Score’ for more information.