Credit Reports and Credit Reference Agencies

In the U.K. whenever you apply for any kind of credit (store card, visa, personal loan, mortgage etc.) the lender will normally assess your credit rating. This is known as 'credit scoring' and it is done in a number of ways. This article discusses one of the processes used, namely a check carried out with a credit reference agency:

In the U.K. the three main credit reference agencies (CRA's) are Callcredit, P.O. Box 491, LEEDS, LS3 1WZ, Equifax plc, P.O. Box 1140 Bradford, BD1 5US, and Experian, P.O. Box 9000, Nottingham NG80 7WP.

All creditors (lenders), and/or any insurer they may employ to underwrite the credit, normally both have a direct and immediate connection with one or more CRA's. Hence, it is now possible to secure a £25,000 loan online in minutes, subject only to you signing and returning the loan agreement, which almost invariably arrives through your letterbox within forty eight hours thereafter.

Before applying for any credit that is significant and necessary to you, it is important to first obtain a copy of your three major credit reports so that you have a chance to correct them if necessary - more on this later. Ignore online offers to provide each report to you for £14.99 or a similar sum: You have a statutory right to purchase this information about yourself (only) from every CRA for the set fee of £2.00. This report is known as a Statutory Credit Report. Each of your credit reports will be different, so it is important to apply for all three, as you are unlikely to know whom your creditor deals with. The quickest way to do this is to apply online with Equifax at www.myequifax.co.uk. You can pay by SWITCH card etc. Next, run off two blank copies of the Equifax application form, complete each of them in ink (changing 'Equifax's name and address to that of each of the other two CRA's), and post a respective application to each of the other two CRA's with cheques for £2.00, made out respectively to 'Callcredit plc'and 'Experian Ltd.' Within a week you will receive your personal credit reports, and both Callcredit and Experian will enclose excellent booklets setting out your rights.

This procedure is necessary for several reasons: Almost everything relevant to your credit history, going back a number of years, is contained in these reports, including savings accounts, loans, one late payment on a loan agreement etc. One negative entry can blight your credit application, and furthermore, every time you apply for credit an entry is made recording this fact. If for example you decide not to proceed with the loan, your enquiry remains on file as a 'footprint.'No record is made as to why the credit agreement was not completed. Consequently anyone undertaking a credit search against you will usually assume that your application was declined. One credit application not pursued can then lead to your next application being declined (because of such wrong presumption by a potential creditor), which in turn can have a snowballing effect with future applications being declined! If you are ever declined credit it is most important to make full enquiries as to why you have been declined credit before making a second application elsewhere, and possibly making matters worse. The CRA booklets explain how to protect yourself.

If you discover that a wrong entry has been lodged on your file then this can only be changed by agreeing a change with the relative creditor and having them do this. Alternatively, if for example you have one or more entries relating to credit which you did not pursue, then you have statutory rights allowing you to place a written explanation on your file as to exactly what occurred. You should write up to two hundred words and post this on your notepaper to the CRA, requesting that your statement be added to your file. This will then be added to your file within twenty eight days. This latter procedure is only potentially fully effective where no mistake has been made, but the information on your file gives a misleading impression. No fee is payable in order to invoke the 'Notice of Correction' procedure.