A credit report is a snapshot of your credit history. It contains essential information regarding your previous payments made on credit including mortgages, credit cards and loans. Lenders look at the information provided in your credit report to assess risk and decide whether to give you a loan based on their criteria.
The information is gathered by the three main credit reference agencies Equifax, CallCredit and Experian. So whenever a lender checks your credit report, they receive information from one of the credit reference agencies, also known as credit reference bureaus.
Similarly, when you apply for credit, miss or make a repayment, the information if sent from your lender back to the credit reference agency. It is important that the agencies have access to real-time data so that any lender you apply with can assess your current financial status. Lenders are able to see things like if you have too many loans open, have made several applications in a short space of time or have missed repayments.
If you’re looking for cheap ways to check your credit report, the companies we feature in our comparison table offer free trials for up to 30 days. This gives you the opportunity to see how your credit report looks and get used to receiving updates. Some individuals need to check their credit report regularly because they are taking steps to improve their credit score. By signing up, you can decide if you are finding the reports beneficial and would like to continue paying the subscription of a few pounds a month.
To gain access to a free credit report, simply choose the company of your choice and click on ‘visit website’ to get started. You must provide some basic details including your name, age and address and credit card or debit card details. If you do not wish to continue using the payment subscription, you must cancel this at the end of the 30 days or you will be charged.
Your credit report is made up of several factors including your personal information, credit history, number of open account and number of searches.
Personal information such as your name, address, national insurance number, birthday and employment are recorded on your credit report. Whether you are on the electoral roll is included and this is a factor that many lenders like to see because it confirms your identity and address.
The credit history shows all the companies that have granted you credit including mortgage companies, credit cards, banks and loan providers. The information confirms when you opened various accounts, how much you borrowed and how well you paid back. If you have missed repayments in the past, this will remain on your file for up to 6 years. Flags will be alerted if you have missed repayments or have ever had a CCJ (County Court Judgement) or faced bankruptcy.
A credit report will be available to anyone in the UK once they turn 18. But having little or no credit can sometimes work against you as lenders have no indication as to whether you are a good lending proposition. As a result, some individuals find ways to build their credit rating by taking out small loans or credit cards with a low credit limit and monitor the results on their credit report.
How many loans or accounts you have open will also be visible on a credit report. This detail is very important to lenders and creditors because it lets them know your affordability – how much you can afford and how much you can repay. Particularly in the payday loan and guarantor loan industry, lenders cannot lend to individuals with a certain number of loans.
Furthermore, your report shows potential lenders how many searches have been made by other lenders on your account. Whenever you apply for a credit product and the lender carries out a credit check, it leaves a hard search or ‘footprint’ on your account confirming that they checked the account. This is different to a soft search, which is not visible on your account and includes searches on the spouse of an applicant. This is relevant because individuals that have a lot of hard searches in a short space of time look like they have made a lot of applications since numerous lenders have been searching their report. This may demonstrate that the person is desperate for funds and may not be a suitable candidate for a loan.
Millions of people in the UK check their credit reports on a regular basis and there are some very important reasons for doing so:
Get better rates for mortgages and loans: Lenders look at your credit report to make an assessment of your creditworthiness. Depending on how well you have paid other lines of credit in the past, lenders will decide what interest rate to charge you with better candidates receiving lower rates of interest because they are deemed as less risk. So if you are looking at big purchases like buying a car or you wish to apply for a mortgage, it is important to check that your credit report is accurate in order to get the best rate.
Check any inaccuracies: Unfortunately, some loan providers and companies we deal with provide the wrong data on our credit reports, perhaps saying that you repaid late when this wasn’t the case. Sometimes this happens by the lender as a mistake but can also happen to people who have a popular name or have relatives with a similar name. Looking at your credit report will allow you to point out any incorrect information and raise it with the provider so that you can get the credit and interest rates that you deserve.
Check fraudulent activity: A credit report alerts you if any lenders have made searches on your account and this includes any fraudulent behaviour. If you have been unlucky and someone has stolen your cards or details and is applying for loans or credit in your name, a credit report will be able to tell you this.
An annual credit report is available from the leading credit reference agencies and you are entitled to receive a free copy once a year. However, this is only available in the United States for free and in the UK, you have to pay for an annual credit report with a subscription of small monthly payments. For a free credit report, you can take advantage of a free trial offered by our various providers or you can gain access to a statutory credit report explained below.
Credit reference agencies allow you to access a statutory credit report for only £2. This provides a one-off snapshot that gives you insight into your credit report and allows you to take note of any discrepancies.
The statutory credit report contains includes information on your personal details, financial links, whether you are on the electoral roll, your credit payment history and a list of recent searches on your file. Everyone in the UK has a legal right to receive a statutory credit report once a year.