Your credit report is a useful document, both for yourself and potential lenders. It’s important to understand what’s included in the report and the impact your actions can have on it. You need to know what lenders are looking for, as this can help avoid issues when applying for credit.
What Is a Credit Report?
A credit report is a document with details of your previous use of credit and whether or not you have kept up with repayments. Lenders use these reports when they’re deciding if they should provide you with credit such as loans, credit cards or mortgages. The information is held by the credit reference agencies and lenders pay to access the service. The details on your report are pulled together from across a range of sources, including the electoral roll, financial institutions and county court judgements.
What Information Is on Your Credit Report?
Your report contains basic personal details, including your name and current address, as well as your date of birth and any previous addresses you’ve recently been registered at
Most of the report is accounted for by your previous credit history, including mortgages and debt consolidation loans. This details the accounts where you’ve had credit, including when it was opened and the credit limit you had or the amount of the loan. There will also be details of any late or missed repayments. The information remains on there for six years once a loan has been paid off or an account closed. It’s important to close any credit card accounts that you don’t use anymore, or the details will remain on your file.
Each time a credit provider looks at your report the search will be recorded. These details can be seen by others searching your file and remain on your record for a maximum of two years. If you have too many searches recorded in a relatively short space of time, it could count against you. This is because a lender might view you as being desperate for the money and trying a number of alternative sources when you’ve already been refused by some.
There will be details of the bank where your current account is held on your credit report. However, there will be no further information, unless you have credit facilities such as an overdraft. There won’t be any information on your savings or other personal details, including criminal or medical records.
Any information that is publicly available can be seen on your credit history. This includes details on county court judgements, bankruptcies or house repossessions. Generally, this type of information will be on there for six years.
Once they have assessed your credit history, lenders will use the information to come up with a credit score for you. This will then determine whether or not they accept you for bad credit loans, mortgages or credit cards.
What Do Lenders Look For?
A credit report enables potential lenders to see your approach to previous credit. They use this to assess your level of risk, which could impact on their decision to provide you with credit or the level of any card limit.
One of the most important areas they look into is the electoral roll. It’s vital that you are registered, as this is how they check that your name and address are accurate. Those who have not previously had credit might struggle to be accepted, as lenders cannot see how they’ve used it in the past. You may also have issues if a lender believes you already have access to too much credit.
Different lenders have varying rules and they all assess credit risk in individual ways. This means that you might be accepted by one lender when you’ve already been refused by another. The best way of ensuring you’re accepted is to be on the electrical roll and use the credit you already have wisely and carefully.