Credit Guide

Checking your Credit report with a credit rating agency

By Becca Talbot becca.talbot@consumerchoices.co.uk

With a financial climate that’s becoming increasingly difficult to obtain credit in, it has never been more useful to know exactly what is on your credit report. However, according to research by the FSA, only 5% of us have actually seen our credit reports in the last year.

Knowing how your credit report works, checking it regularly, and if needs be, working to improve it, allows you to correct anything that might be preventing you from getting the credit you need. A good credit report will make your life a lot easier, as the contents of everyone’s individual credit report can affect whether or not you are given credit, such as loans, credit cards and mortgages.

Our guide will tell you everything you need to know about credit reports and the credit rating agencies that compile them.

What is a credit report?

Credit reports are used by the majority of banks, building societies and loan providers to assist them in making credit decisions. Whenever you apply for new credit, whether it’s in the form of a credit card, loan, mortgage, or even a mobile phone contract, lenders will evaluate your credit rating to determine whether you are a responsible borrower.

Credit reports allow lenders to predict the likelihood of credit being repaid by the borrower, and they are widely recognised as one of the most consistent, accurate and fair forms of credit risk assessment.

The credit rating system allocates points based on the borrower’s credit history, and these points are totalled to produce the borrower’s credit score. As long as the borrower’s score reaches a certain level, and they can meet other policy requirements set out by the lender, most lenders will generally accept a request for credit.

Read our guide to find out more about your credit rating.

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What is a credit rating agency?

Credit rating agencies maintain records on an individual to assist banks, building societies and loan providers in assessing credit applications. These records include:

"As different agencies use different details, it is sometimes possible to increase your acceptability for credit by picking a lender using a specific agency..."

Electoral roll status
Bankruptcies and insolvencies
County court judgements/court decrees
Names of people with whom you’re financially associated (including spouses with joint accounts, business partners, landlords)
Details of previous credit rating searches carried out by other organisations

Most lenders also pass on details of an individual’s previous and existing borrowing activities to the credit rating agencies, which will then be filed in his or her credit report.

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The different credit rating agencies

The three main credit rating agencies used in the UK by lenders are Equifax, Experian and Callcredit:

Equifax - Equifax operates primarily in the business-to-business sector, selling consumer and businesses credit reports. In 1999, Equifax began offering services to help people monitor their credit history, including alerting consumers to the possibility of them being a victim of credit fraud or identity theft.

Experian - In the UK, Experian supports over 600 clients across a range of markets, including financial services, retail, home shopping, telecoms, utilities, media, insurance, automotive, leisure, charity and property. The company collects information on people, businesses, motor vehicles and insurance. It also collects ‘lifestyle’ data from online and off-line surveys.

Callcredit – Callcredit, created by Skipton Building Society, is now firmly established as the UK’s third credit rating agency, supplying information to lenders and other organisations to enable them to establish an individual’s credit history. Callcredit’s client base includes legal firms, banks, building societies, finance houses, mail order, telecoms and utility companies.

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“Which credit rating agency does my bank use?”

The table below shows which credit rating agencies various different banks, building societies and loan providers use to check against a customers credit history.

As different agencies use different details, it is sometimes possible to increase your acceptability for credit by picking a lender using a specific agency. If you have been turned down for credit with one lender, it may be worth choosing a lender working with a different agency.

Lender	Credit rating agency used for credit searches
Lender
AA
Abbey
Alliance & Leicester
American Express
Bank of Scotland
Barclays
Capital One
Direct Line
First Direct
Halifax
HSBC
Lloyds TSB
Nationwide
NatWest
RBS

CreditChoices.co.uk data, correct as of September 2008.

If your lender is not on the list, it is always worth checking with them as to which agency they use.

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How to check your own credit report

To instantly access your reports, use the following links:

Equifax (costs £14.95 a month)
Experian (costs £6.99 a month)
Callcredit (costs £4 a month)

As well as giving you information about your credit history, the file will also provide the names of people you are financially associated with.

When you apply for a copy of your credit report, the credit rating agency you’ve applied to will issue, along with the report, details of what to do if you think your file contains any inaccurate information and what actions can be taken to correct this.

Under the Freedom of Information Act 2000, you are entitled to request a copy of your credit report. You can write to each agency requesting a copy of your credit report, enclosing the statutory fee of £2, at the following addresses:

Equifax: Credit File Advice Service, PO Box 3001, Glasgow, G81 2DT
Experian: Consumer Help Service, PO Box 8000, Nottingham NG51 5GX
Callcredit: Customer Service Team, PO Box 491, Leeds LS1 5XX

Although this is cheaper than getting your report online, you could be waiting as long as six weeks for the information.

Alternatively, you can log on to Check My File and sign up for their Triple Agency Report. This is your best option if you want to know exactly what your reports say about you – and saves you £3.90, when compared to purchasing your three credit reports individually, offering great value for money.

The reports based on Callcredit and Equifax data include the information that the UK’s largest lenders see when you apply for credit – your full credit report. You’ll also be able to see the information that most UK companies, employers and landlords see through the public credit report based on Experian data.

No single credit rating agency can provide you with details of all of your credit history, because lenders tend to report how you are keeping up repayments to just one, or sometimes two of the three agencies.

And you can be rated very differently depending on which credit reference agency a lender uses when they search you. A Triple Agency Report with Check My File Check My File provides you with information from all three agencies, letting you compare your credit reports.

Read our guide to find out more about understanding your credit rating.

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The banks’ own systems

It is important to bear in mind that, for some lenders, a borrower’s credit report is not the only thing that is considered when reviewing an application for credit. Banks, for example, often have their own customer rating system, by which their customers are given a score as to how good a customer they are. Things that affect this score include asking for overdraft extensions, missing a credit card repayment, and not making any deposits into your account over a long period of time.

Under the FOI Act 2000, you are entitled to know this score, and can find out by asking a cashier, whenever you go into a branch of your bank.

To find out more on this, visit Money Saving Expert’s forum for a discussion on banks’ customer rating systems.

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Summary

Lenders want to see that you can pay back what you borrow, which can be a problem if you’ve never had to borrow. While lenders don’t favour people with huge debts or a history of missed payments, they like somebody who has paid back a number of different types of credit, such as a loan or a credit card, over time.

People with a poor credit rating may struggle to get the credit they want, or have to pay back at higher interest rates. Similarly, if you have little or no history of repaying credit, lenders won’t have enough information on which to base an offer, so consequently won’t know how creditworthy you are.

If you find that your credit report is affecting your choice of credit options, then read our guide for useful tips on how to improve your credit rating.

Chris Eagle, Commercial Manager of ConsumerChoices.co.uk says: “The better you understand your credit report, the more likely it is that you’ll be able to improve your credit rating, and get the best deals on any financial products or services you need.”

“You should check your credit report at least once a year,” Chris continues. “And more so if you have a have taken out a number of credit products, such as loans and credit cards. If you are turned down for credit or borrowing due to a bad credit rating, it is a good idea to get a copy of your credit report. If there is incorrect information in the report, you have the right to have this removed. Contact the credit rating agency to find out how to have this done.”