What is the purpose of a credit check?
- Lenders will assess you on the basis of your credit check to determine whether you will be able to repay the money they lend you.
- Other companies like mobile phone or utility companies will run a credit check on you before offering you an account to make sure you will be able to pay for their services.
How is a credit check done?
Certain information about you and any existing credit agreements is held by a credit reference agency and any company wanting to make a check on you will make a request for the information. The main UK agencies are Experian, Equifax and Call Credit.
The credit reference agency will hold the following information about you:
- Your address on the electoral roll
- Any court orders against you for non-payment of debts
- Bankruptcies declared against you
- All current and previous credit agreements
- Any recent applications you have made for credit
The lender will assess you on the basis of the information obtained. This determines whether you will:
- be offered credit on standard terms,
- be offered credit at special terms (i.e. higher interest, shorter repayment period), or
- turned down for credit
How can you repair a bad credit history?
- Get a copy of your credit report and make sure everything is up to date (for example, if you have paid a CCJ you may need to get a certificate of satisfaction from the court before it can be shown as satisfied.)
- Explain any good reasons behind past problems by adding a notice of correction to your credit report.
How can you obtain your credit report?
If you are interested in getting a copy of your credit report, you can apply to an agency such as Experian, Equifax or Call Credit. They are obliged to send you a copy of your own credit report (for a small charge) within 7 working days.
These agencies let you order your credit report over the internet. For a higher fee, you can also see your report online.
You can check your credit record with one of the following three credit reference agencies:
- Experian – www.experian.co.uk - You can order your statutory £2 credit report online, by phone, or in writing. Click here for details.
- Equifax – www.equifax.co.uk - You can order your statutory £2 credit report online, or in writing. Click here for details.
- Call Credit – www.callcredit.co.uk - You can request a copy of your statutory £2 credit report by post. Click here for details.
These agencies provide a range of credit reporting and monitoring services – check their websites for further details of what these services provide and cost.