You can get credit from pretty much every institution out there. You go buy a new refrigerator and you will probably be given credit. You can get a loan, as well as a credit card without too much hassle. Sure, sometimes, you could be rejected. There are lots of factors to take in consideration. But then, have you ever wondered how your lender decides whether or not you can receive credit?
The credit report is one of the most common tools these institutions will use. Lenders and institutions will get to know more about your financial history, bills, payments, credit procedures and so on. Each lender has a formula and can give you a certain amount of credit based on these details. Now, what else should you know about the credit report and score?
Understanding who completes credit reports
Every financial move you make is recorded to a certain point. The positive ones will be recorded, but especially the negative ones. In the UK, there are a few companies compiling and providing credit reports – they are known as credit reference agencies. There are more options out there, but three of them stand out in the crowd:
- Experian
- TransUnion
- Equifax
Each of these companies has a file regarding your financial history – the credit report. Obviously, not being able to update everything can cause some discrepancies. Therefore, information may vary from one agency to another, but changes are usually small and insignificant – fixing them is normally a matter of time only.
Figuring out what your credit report is
So, what is your credit report and what does it actually mean? Your credit report holds a series of details about you. Your credit accounts represent the most important ones – bank accounts, credit cards, loans and utilities. These details will show if your payments are done on time – a missed payment, for example, could be on your record for six years or more.
Then, the credit report will also include details of financial links, such as people who you took joint credit with. Public record information – like court judgements, repossessions or bankruptcies are also mentioned and will stay there for six years or more. Current accounts are included too, but only overdraft issues.
Now, are you on the electoral register? If you are, you will show up. Your full name is also mentioned, as well as your date of birth and previous addresses. Frauds are mentioned as well – even situations involving identity theft, even if you were the victim.
Finally, the credit does not include any personal information like your wages, criminal record or religion.
Who needs your credit report
It sounds pretty invasive, but then, who looks at the credit report and who actually needs it? When you apply for credit (regardless of the type), you basically allow the lender to look into your credit report. It is not all about lenders, but mobile companies may also look at your report if you need a contract. Employers can do too, not to mention landlords.
When in need of credit, it is worth noting that different lenders look at different aspects when considering your credit report. There are more considerations out there and each of them is needed for specific purposes – plus, different lenders rely on different agencies.
In the end, your credit report is directly responsible for your score, which will inevitably give you access to excellent deals or no deals at all. Therefore, it is in your interest to ensure you keep your records clean – it may also be worth checking your credit report yourself and fixing any mistakes.
