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Top Credit Report Myths Busted

Top Credit Report Myths Busted

Overview

Credit reports have been around in the UK’s financial landscape since the advent of the industrial revolution in 1842. However, there’s a lot of confusion about the kind of information they contain as well as the role they play in the applications of loans, credit cards as well as mortgages. If you’re keen on discovering the most common credit report misconceptions, look no further. Below is a list of the most common credit report myths.

1. A poor credit history translates to a credit blacklist
This myth is among the oldest and most common credit report myths in the UK and the global financial world as a whole. It is worth noting there is no single credit score that UK lenders use (or all other lenders for that matter) to decide if they will lend people or not. Instead, different lenders use different ways of evaluating the risks involved in lending individual customers. This simply means it is possible for one lender to accept a customer’s loan application while another lender rejects the same customer based on the same credit history. Having a bad credit history doesn’t, therefore, result in an automatic credit blacklist.

2. Credit reference agencies decide who gets loans
There has also been this misconception that credit reference agencies play a key role in deciding the outcome of credit applications. This couldn’t be further from the truth. The work of credit reference agencies is simply supplying lenders with credit information about different borrowers. Lenders ultimately decide who they want to offer loans based on the information supplied by credit reference agencies. They also consider any information they may have about borrowers as well as the information borrowers submit in their application.

3. Credit reference agencies have the same information about borrowers
Many people have also been tempted to think that UK’s main credit reference agencies namely; CallCredit, Experian and Equifax all have the same information about individual borrowers. This is not the case. Different credit reference agencies have slightly different credit information about borrowers. The slight differences are as a result of lenders sharing credit information with some (not all) credit agencies at any given time. Credit reference agencies also tend to use the same formula in a different way. As a result, credit scores and reports are rarely identical in all three of the main credit reference agencies.

4. Checking your credit report frequently damages your credit score
Many people also tend to believe that credit reference agencies penalise individuals who check their credit scores too often. This is a false belief. You can check your credit report/score as many times as possible without damaging your score. In fact, it is advisable to do so to make sure your credit report has the right information. Checking your credit score often also helps you to identify any fraudulent activity that may have taken place. You should only be worried about making too many loan applications instead since declined applications have an adverse effect on credit scores.

5. Credit reports retain information on missed payments indefinitely
Your credit report retains information on defaults for a maximum of 6 years after you have settled payments or defaulted. Most information i.e. account data including missed or late payments is removed after 6 years. It is, however, worth noting that most lenders use new as well as old information to determine if they will issue loans or not. It is therefore in your best interests to make sure you don’t default or miss any payments. You shouldn’t, however, be worried if you do so due to unavoidable circumstances.

6. You have a better chance of getting credit/loans if you have never borrowed
Many people also tend to think that having no credit history is a good thing. This isn’t the case. Lenders love borrowers who have borrowed before because it’s easier to assess the risk profile of such borrowers. If you haven’t borrowed before, it’s hard for a lender to determine factors like your credit worthiness. Considering lenders rely heavily on such information, your loan application can be easily denied if you have never borrowed before.

Summary

There’s lots of inaccurate credit report information out there today. After going through the above information, you shouldn’t have a problem identifying common credit report myths which usually stand between you and the credit you deserve. Furthermore, having accurate information about credit reports and scores is the first step to making sure you maintain a healthy credit report/score.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.
How to Run a Credit Check in the UK

How to Run a Credit Check in the UK

Overview

Although it’s not mandatory to perform a credit check in the UK or anywhere else, it’s a good idea to do so. Remember, a credit check reveals your credit score and credit history information that gives you indications of all the issues that are bound to affect your ability to access personal loans, payday loans, short term loans, mortgages, car loans etc. 

Getting started

The UK has 3 main credit reference agencies namely CallCredit, Equifax, and Experian. There are many other referencing agencies. It is, however, important to work with these three agencies because they are the most reputable. When you want to run a credit check, you should also consider the fact that they don’t all give the same score. It’s advisable to choose the agency that matches your lending needs perfectly i.e. an agency used by your preferred lender.

Requesting for a credit report

You can request for a copy of your credit report from any of the three main agencies in the UK. You can request online or offline (by post). UK citizens have the right to obtain their full credit report according to the Consumer Credit Act. The three main agencies are obligated to give UK citizens one free report a year. Citizens interested in getting their report more than once among other credit referencing services are required to pay a fee dictated by the credit reporting agency in question. Below is the information of the three main credit reference agencies in the UK to help you request for your credit report by post or online;

CallCredit

Website: http://www.callcredit.co.uk/, Phone: 0870 060 1414, Consumer Services Team, PO Box 491, Leeds, LS3 1WZ.

Equifax

Website: https://www.equifax.co.uk/, Phone: 0844 335 0550, Equifax Credit File Advice Centre, PO Box 1140, Bradford, BD1 5US. 

Experian

Website: http://www.experian.co.uk/, Phone: 0800 013 88 88, Customer Support Centre, PO Box 9000, Nottingham, NG80 7WF.

Procedure

When running a credit check online, you will need to enter your details to run a credit check. Agencies usually require you to register with your personal information i.e. your names, date of birth, email address and phone number. You are also supposed to review and accept the terms and conditions of the credit reference agency in question, confirm the information you have filled in and then submit your request. You may also be required to provide other information i.e. you payment information if you want to pay for other credit reference services. Once you submit, you should be able to get your credit report immediately.

Reporting problems?

In case you encounter a problem running a credit check, you can always contact the agency. If your report has problems, you should report and request for amendments. It’s important to note that credit reference agencies get information from banks/lenders you have dealt with in the past, so any errors submitted by those institutions will reflect in your credit report. 
Credit report errors can range from something as small as a wrong address to fraudulent activities and defaulted payments you actually made. You can, however, report such problems and have them rectified so that your credit report shows the accurate credit score/information. Mistakes such as a default payment that you actually made affect your credit score negatively so it’s important to report any problems you find on your credit file. 

You can write to the credit reference agency or use the online mechanism the agency has for reporting errors. You should make sure you give a detailed explanation as well as evidence if you have any to make sure the error or errors are corrected. 

Credit report agency responses

Credit reference agencies have 28 days to act on concerns raised on credit reports. During this period, such concerns/errors are marked as ”disputed”. This is usually the case so that lenders who come across your file can be alerted not to rely on the specific piece of information that is disputed. In case the agency fails to amend your records, you have a right to send them a notice of correction which should be added to your credit file. The notice should not exceed 200 words. It should also explain why the piece of information in question is wrong including mitigating circumstances i.e. a good reason why you missed a loan payment such as a sudden bereavement.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.