Our ability to receive credit can affect many aspects of our lives from getting a credit card to being accepted as a tenant or being approved for a loan or mortgage. Our credit report is very important, but what is it?
Your credit report shows information about your credit agreements with any lenders or creditors. It therefore represents how well you manage your financial affairs with companies and how effective you are at meeting payment commitments both on time and in full.
Each creditor can add details to your credit report such as the type of financial transaction involved (an unsecured loan, for example), the current balance of the credit and the date of the credit agreement.
The most important aspect of a record in your credit report is the status history. This provides a coded summary stating whether you are making your payments on time and in full.
There is also a code in the status history that indicates that a lender has terminated an agreement because you have defaulted on repayments and have failed to find a way of meeting the commitments of the loan or credit agreement.
If you have defaulted on a loan or credit agreement, this will stay on your credit report for six years and will definitely reduce your credit rating.
As mistakes can be made, which can cause you to be erroneously rejected for credit facilities, it is important to check your credit report every now and then and to definitely do so if you start receiving rejections for things like a credit card and you don’t know why.
There are companies such as Credit Expert and Equifax who offer unlimited and detailed access to your credit report, there is a monthly or annual fee for these services, although these companies do offer a free 30 day trial.
There is also a statutory report available for £2 which contains all the pertinent details that you need to assess how good and accurate your credit file is.
The major credit assessment companies such as Experian and Equifax are obliged by the government to provide you with a statutory credit report if you ask for it and pay them the £2 fee. They can send it in the post if you want them to as part of the £2 fee.
Your credit report is important and plays a major role in determining your credit score and credit worthiness.
This doesn’t mean that you need be paranoid about it, although paying attention to the health of your credit report makes good financial sense and can reduce the risks of identity theft and inaccurate entries that can reduce your ability to receive credit.