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Whenever a
finance lender is assessing a finance application, they will check
the details held on your credit record by Equifax and/or Experian.
This is because they are not allowed to ask for any information
about you from other finance companies with whom you have a credit
agreement. Also, by contacting one of these two agencies they can
gain access to your entire finance and credit history with just one
request, instead of having to gather information from lots of
different sources.
Your credit file will also show
details about other people who live at your address if they are
financially linked to you, or if the credit reference agencies think
they are financially linked to you. In this way, another person's
bad credit history can sometimes bring down your credit score. But
if you find you are wrongly linked to another individual, you can
contact the credit reference agencies and ask them to fix the
mistake.
Whenever a finance company
makes a search of your credit file, that search is recorded on your
credit file, leaving what's called a credit check "footprint". This
means that whenever you apply for credit, it is easy for the lender
to see if you have already been shopping around for finance. If you
have applied for credit from lots of lenders in a short space of
time, this in itself could affect whether or not the current lender
will agree to give you finance.
A lot of people think that
there is a credit "blacklist" you can end up on if you have a
particularly poor credit history, and that if you are on this credit
blacklist then you will automatically be refused credit.
This is simply not true - there
is no such thing as a credit blacklist. If you have been refused
finance or other forms of credit, the reason will be because your
credit score was not high enough to meet that lender's criteria.
When a lender requests
information about you from a credit reference agency, they apply a
mathematical formula to that information in order to generate your
credit score. Different lenders will use slightly different factors
to come up with a credit score for you. Also, the definition and
thresholds of a good or acceptable score will vary from one finance
lender to another. Therefore, it is quite possible to be turned down
by one finance lender but be offered finance by another.
The Data Protection Act means
that the credit reference agencies must give you a copy of the
information in your credit record in return for a small
administration fee. At the time of writing, the fee for each agency
is £2.
Your credit file details are
supplied by post, but you can request a copy of your file by
telephone, post or email. Details or how to apply can be found on
the Equifax and Experian websites. Remember that because some
companies supply information to Equifax, some to Experian, and some
to both, you will need to order copies of your file from both
agencies in order to get a complete picture of your credit record.
Alternatively, the online
credit report services available from companies such as
checkmyfile.com
will allow you to undergo a free credit score check, as well as
download (for a fee) a copy of your full credit report.
If you find that your credit
report contains any mistakes, you can ask Equifax and/or Experian to
correct the errors. Full details of how to correct mistakes on your
credit file are available from the credit reference agencies.
Each time you approach a lender
for finance and they run a credit check on you, you are potentially
worsening your credit score due to the footprints this will leave on
your credit record. And given that different lenders will have
different criteria for assessing your credit worthiness, it makes
sense to take expert advice right from the start if you are looking
to obtain finance but suspect your chances of success may be
affected by a poor credit rating. |
