What is Credit Report?
A credit report includes the minutest details of your credit history for accounts you held for past six years. So, anyone above the age of 18 who has taken a credit, there are chances a credit reference agency holds your credit report.
The information that your credit report has are majorly:
- Your credit accounts. This not just include banks and credit accounts but any kind of credits you have whether it be a mortgage, loan, utility bills etc. This report details all the transactions like timely repayments in full or partial, missed or late payments. All such details of past six years will be registered in your report.
- This report will also include the details of people financially linked to you whether regarding some loan or joint credit.
- Your credit report keeps track of Court Verdicts for non-payment of debts, property repossessions, bankruptcies as well as individual voluntary arrangements.
- Detail of your overdrafts of your current account provider
- Any Electoral registration
- Basic information like your name, Date of Birth, addresses whether current or previous
- Any fraudulence by you or you falling prey to such scenario, this information is available in your file under CIFAS section.
Please Note: Credit report only carries the above mentioned details. No other personal information like your salary, religion or criminal cases are recorded in it.
How to check your credit report?
In UK, there are mainly three CRAs (Credit reference agencies) Experian, Equifax and Callcredit. All these CRAs claim to keep a constant check on your credit activities and notify you if anything unusual happens. These CRAs offer you free service for initial 15 to 30 days but for further assistance they charge you an amount.
Every individual should keep a continuous check with all these three agencies to be abreast about their credit reports as financial institutes majorly rely on these CRAs. It’s also your legal right to have a copy of your credit report and score although it incurs a nominal charge.
People who will view your credit report?
Majorly the necessity of your credit report arises when you apply for credit. This is when you permit the credit providers to cross check your credit report. Credit providers are not necessarily money lenders, credit card providers or banks they can also be service providers like mobile telephone service for those having phone contracts, Employers and Landlords to access general public record information like Electoral registration information, Court Verdicts and Insolvency records.
How do lenders analyze your credit report?
Every lender has a different requirement while they view your credit report. As each of them may have a different criteria for lending credit. Therefore a good credit score can make it easy for you to get a credit, loan or even a mortgage that too at impressive rates. The CRAs mentioned above also allow you to keep a track of the information that lenders pay attention to while they do a credit check.
How important is it to have a good credit report?
It is actually very important for you to have a good and clean credit report as this will help you to apply for loans, get credits and mortgage as well. Because if you have a low score it’s quite possible that lenders will not be interested in lending you money.
Keeping a regular check on your credit score may help you improve your credit report. It can also help you ensure if the reports are correct and also gauge as to what is affecting your credit score and work on them for improvement.
How can the credit report rating be improved or corrected?
- By keeping a regular check on your credit report you can rectify the factual errors that may affect your credit score. If there is any such problem you can approach the CRA or the lender directly.
- A regular check also helps you get credit because if you have an unmanaged credit report lenders may opt to not lend or even if they do they will charge a high interest or even offer you a smaller amount of credit
- One more thing that you can do to improve your credit report is to surrender credit cards that are unused.
What is a credit score?
It’s as good as your school report card. Like your report card determined if you will be promoted to the next class so does your credit score determines whether or not a lender will lend you. Basically your credit score shows how committed are you in repaying your dues. A good track record will give the lenders like banks and credit companies the confidence to lend you. To gauge your credit score, these lenders hire CRAs who give them a detailed credit report having the complete credit history of your accounts. Based on this report the lenders will calculate your credit score. This score will help them calculate the risk level of lending you. Therefore, the higher the score the better are your chances to get a credit and that too at a great rate of interest.
Not only it’s about the decision of lending you but also the amount they will lend, the rate of interest they will charge. It will also affect your ability of getting insurance and mobile phone contract.
Lenders usually don’t rely on a particular CRA and thus consider consulting different CRA agencies. Because sometimes the credit report presented by all the above mentioned CRAs may differ and therefore a regular check helps you keep an eye on your credit report as well as manage it.
Lenders don’t always decide depending on one particular aspect. They have different criteria to assess you whether you are a potential customer or not. Monitoring your credit repost regularly will also help you understand the areas you lack behind and work on them to improve your credit score.
Because though your missed payments may affect your score but if your recent scores are good they might consider you as a good customer, if your transaction shows lesser risk and promises timely recovery. So, always try to maintain a good credit score.
Your history will determine your Future
You may think you don’t need an immediate credit and can get lazy about keeping a track of your credit score but that hardly matters because whenever you decide to take a credit your entire credit history will determine if the lenders will lend you, even if they do what will the credit amount and the rate of interest. So, be careful as being rejected more than once or twice may bring your credit score down.
So whether, you want to buy a property, get a mobile phone contract or want credit for any other reason your credit score is all that can save you. So our advice for you is to start now!
A good credit score can actually be quite useful lifelong. Like if you have a good score you can easily apply for student credit account with lesser or interest-free overdraft.
One more thing to keep in mind that every lender checks your credit report which holds the basic information regarding you like name, address etc. therefore, if you are enrolled as an electorate you can improve your credit score.
Good Credit Score
Different lenders access you differently but good credit score like in terms of points for example 4 out of 5 is a great score to bring you in the set of consideration of a potential customer. Although just credit scores don’t alone determine your chances of getting a credit there are other actors as well depending on the lenders discretion.
How can the credit score be improved and within what time?
Like Rome wasn’t built in a day so is the case with credit report, it takes time to create a clear history. Your history should show timely repayments, timely tracking and proper management.
Credit card scores can be improved gradually
- Every lender checks your credit report which holds the basic information regarding you like name, address etc. therefore, if you are enrolled as an electorate you can improve your credit score.
- Also try to retain the same address as lenders tend to lose their confidence if there are too many address changes.
- Make timely payments is very important to maintain a clear track record and better credit score.
- Keep an eye on your credit report not just helps you manage it but also ensures that no mistake is made in the report. It also keeps your report secured from any fraudulence.
- Sometimes it may not be your scores but someone else’s score that may spoil your report, the ones with whom you have a joint account, so be careful.
- Legal Verdicts that go against you due to non-payment of debts will harm your reports extremely dropping your score to a lower level.
- Last but not the least, try to clear your previous debts before applying for a new credit because lenders like banks, credit card companies and building societies may consider it unwise to lend money to a person who is already in several debts.
So, these are a few tips you can try to apply to improve your credit score by constantly checking your credit card report through the CRAs and processes mentioned above.
Any questions? Schedule a call with one of our experts.