What sort of information do the credit reference agencies use to create my credit history? ●Public information from the full electoral roll, which householders give to local authorities. This is published each December and updated monthly.
This information helps lenders confirm names and addresses and also gives an indication about how long the applicant has lived at his or her current address. According to credit reference agencies, people who tend to move around are statistically less credit- worthy than those who stay at one address. ●Court judgments and public records regarding bankruptcies, individual voluntary arrangements and administration orders. In addition, information on repossessions from members of the Council of Mortgage Lenders. They share details of people whose homes have been repossessed in the last six years.
This information allows lenders to see if you’ve ever declared yourself insolvent or if there has been a county court judgement against you – which would have negative impact on your credit rating.
However, according to the credit reference agencies, lenders will also be able to see whether you’ve started to pay back what you owe – which would have a positive effect on your rating. ●Searches on the credit reference agency database that leave “footprints”. These footprints are left on the database each time a search on any given person and their credit details is made, detailing which company has accessed the database and when. Credit reference agencies keep records of these searches for up to two years.
This record of searches forms part of the information seen by lenders, although they do not see who has accessed the information. The record allows them to identify “abnormal activity” (a large number of applications for credit made by the same person over a short period of time, for example), which could mean that the person is applying for credit way beyond their financial means, or that someone is trying to commit fraud in their name. ●Details from the UK’s major lending companies of their customers’ credit agreements. Lenders update the databases each month
Lenders can check to see if credit applicants have repaid other lenders in the recent past or are repaying current credit agreements. They can also check how much the consumer already owes to other lenders, to help them decide if the consumer can afford to take on further credit. Then, based on their commercial experience and requirements, they can decide what sort of financial products they are prepared to offer and at what price. How can I get a copy of my credit history? By contacting one of the three credit reference agencies and paying a £2 fee. ●Experian, Consumer Help Service, PO Box 8000, Nottingham, NG1 5GX, Telephone; 0870241 6212 ww.experian.co.uk ●Equifax, Credit File Advice Centre, PO Box 1140, Bradford BD1 5US www.equifax.co.uk ●Callcredit, PO Box 491, Leeds LS3 1WX www.callcredit.plc.uk How do lenders calculate my score? Lenders have different lending policies and scoring systems, and so applications to them may be assessed differently. But generally speaking, your credit score is based on your history of paying off debt and your ability to pay it off.
Credit scoring systems allocate points for each piece of relevant information and add these up to produce a score. This analysis enables banks to identify characteristics that seek to predict whether you’re a good risk or a bad risk. When your score reaches a certain level, then banks will normally agree to your application; if your score does not reach this level, they may not. How do I find out my credit score? To help people better understand how credit scoring works, the credit reference agencies have come up with devised a system for letting you know where you stand. This is based entirely on the credit report they hold and is available for a nominal fee. It offers a good guide to how your credit report will affect a lending decision.
For instance, Experian uses Credit- Expert, the monitoring service, to calculate your “national credit score”. Scores range from 0-1,000. Any score bBelow 720 – prime credit card junkie territory – and you’re in credit exile. A score between 721-880 is deemed “fair” – in fact half of the country falls into the 800-850 category. If you score above an 881 – which is considered “excellent” – the card companies will overwhelm your mail slot with deals; they probably already do. What if there is wrong information in my history? If your bank has supplied incorrect information to a credit reference agency, you should contact the person dealing with your credit application, or write to them explaining why you think that the entry is inaccurate and ask them to amend it. If you have a question relating to the data supplied by another lender, you should write to the lender directly, again asking them to amend it.
