---

Add a comment

Print

 

---

Bookmark with:

What's this?

Credit report service

Payment habits could affect your credit rating

Wednesday 19 November 2008

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

Banks and building societies will share more customer personal information, in an attempt to spot early signs of financial difficulty, according to a consumer credit report service.

Checkmyfile (www.checkmyfile.com), one of the UK’s leading credit report services, has said lenders are planning to include more personal information, such as payment habits, in their credit assessments for borrowers.

Checkmyfile believes the move will affect around 3.5 million cardholders who make only minimum monthly payments.

The credit rating agencies which compile customer credit reports for banks and building societies, will now collect details of customers who only make the minimum payment each month on their credit cards and loans. They will also look at people who use their credit card to withdraw cash, as well as how they manage their credit accounts and the amount of credit they have available.

Research by checkmyfile found that around 3% of card holders withdraw cash using their credit card regularly, with a further 28% admitting to having done so very occasionally.

Barry Stamp, joint managing director at checkmyfile said: “Consumers should not fear the continuous improvement in the content of credit reports – as it is in everyone’s interest that lending is always done responsibly, and that those who deserve credit can get it quickly and cheaply.”

He continued: “They should however, remain conscious that credit reports are used not only to predict creditworthiness, but also to predict propensity to borrow.”

These new data sharing proposals will be in place by the end of this year, but the core components of a borrower’s credit file – namely how they have paid their credit accounts in the past and whether they are on the electoral roll – remain key in any credit rating application.

A credit card habits survey carried out by CreditChoices.co.uk found that only 38% of cardholders questioned paid off the full balance of their card each month, and over 95% of customers had increased their credit limit at least once. The survey questioned 319 respondents in October 2008.

Checkmyfile also noted that lenders will often only give credit to those they consider profitable.

“The reporting of credit card payment habits will enable lenders to identify full payers more easily, and card companies focused on short term profitability may well turn away applicants with a perfectly good credit history, concentrating available credit on more profitable extended credit takers,” added Barry Stamp.

Chris Eagle, commercial manager at CreditChoices.co.uk agrees: “This move by credit rating agencies to include customers’ payment habits in their credit files is an interesting development. It is another step in the long road to obtain sufficient facts to enable lenders to assess creditworthiness accurately.”

Check your credit rating >>>

10 ways to fix your credit rating >>>

A guide to Credit Rating Agencies >>>

10 Credit Card Mistakes >>>

Blogspot - Olivia Buck needs debt help - Credit ratings >>>

---

Add a comment

Print

 

---

Bookmark with:

What's this?