What does your credit report say about you?

Anyone over 18 who has ever taken out credit – on a mortgage, a credit card or bank loan or even to set up gas and electricity supply or a mobile phone contract – is likely to be the subject of a personal credit report compiled by one of the three best-known of the UK’s credit reference agencies.

Your personal credit report is a history of the credit you have had and it provides a snapshot of your credit accounts and record of repayments; it shows potential lenders how well you cope with your finances. Lenders use your report to decide whether to offer you credit and sometimes to decide how much to charge – reliable borrowers with an excellent record may be offered lower interest rates.

The more you know about what your credit report contains and how it is used, the better your chances of getting the credit you need at the best rates. Your credit report helps lenders to confirm your identity, which in turn helps to fight fraud. It also lets them assess your credit-worthiness by providing:

• Account information – what accounts you have and whether you make payments on time and in full.. Any bankruptcies, insolvencies, IVAs or judgements for non-payment will also be shown.
• Address details – where you live now and where you have lived in recent years. Any other addresses you may be linked to will be listed.
• Financial connections – names of people you have a financial connection with – maybe a joint mortgage holder or a business partner – whose circumstances may affect your ability to repay what you owe.

As it is such an important document, it makes sense to get to know your credit report well. If there is an error, you can contact the organisation responsible and arrange for it to be corrected. Monitoring your credit report can also offer some protection against the increasing prevalence of identity fraud. Keeping an eye on your credit rating enables you to spot any unusual entries and tackle problems before they escalate.