The more you know about what your report contains, how it’s used and what you can do to improve it, the better your chances are of getting credit when you need it.
Lenders look at credit reference agency reports. According to Experian, lenders can look at your report only with your permission. Your credit report provides a snapshot of your credit accounts, repayment record and how well you are coping with your finances.
They use it, along with information on your application, to decide whether to offer you credit – usually by calculating a credit score for your application. They may also use it to decide how much to charge – people with an excellent record of handling credit, for instance, may be offered lower interest rates.
Your report helps lenders to confirm your identity, to fight fraud and to gain information that enables them to assess whether you’re a reliable borrower and whether you can afford to take out more credit. An Experian report shows what credit accounts you’ve had and whether you’ve made repayments on time and in full. Items such as missed or late payments stay on your credit report for at least three years, while Court Judgements for non-payment of debts, bankruptcies and Individual Voluntary Arrangements stick around for at least twice that long.
The credit report shows the current address at which you are registered to vote as well as the previous one. It also contains details of other addresses you’ve been linked to in the last six years – such as those you’ve given to lenders on previous application forms.
Another section lists the people with whom you have a financial connection, such as a joint mortgage. They are known as your financial associates. Their credit history doesn’t appear in your credit report. But when you apply for credit, lenders are able to look at their credit history – because their circumstances could affect your ability to repay what you owe.
Information in your credit report comes from two major sources – firstly from public information including the Electoral Roll and Court Judgements, and secondly from your credit history, compiled from information which previous lenders have shared with the credit reference company. Many lenders share information on what you owe, and whether you’ve paid on time. You agree to this as part of any application for credit. Although some lenders only contribute information on accounts that have defaulted, others share all accounts including those where regular repayments are made.
