Understanding Your Credit File

Sit down with a friend and ask them questions about themselves. They’ll be able to tell you things such as what there favourite foods are, their favourite cars, how they like their coffee, what time they like to get up, go to bed, etc. Ask them how much they know about their Credit Record though, and chances are they won’t know much – if anything! So how much do you know about your Credit File? It’s always a great idea to get acquainted with your Credit Record, because it will play a huge role in helping lenders to determine whether or not to loan money to you. By familiarising yourself with your file, you can also see where you need to make improvements. Before we go any further though, it’s wise for me to explain to you what a Credit Record is and what information is on it.

What is a Credit Record and What Information is on it?

It’s pretty simple really. Basically a Credit Record reflects your payment history and gives prospective lenders an idea as to how you manage your debts. Your Credit File will contain the following information:

o Personal information – your name, residential addresses (past and present), date of birth, employment details, drivers licence number;

o Credit applications and/or enquiries you have made over the last five years;

o Records relating to some current accounts;

o Defaults – put simply any overdue/outstanding accounts that may be listed against you;

o Bankruptcy details;

o Judgements – court orders instructing you to pay a credit a certain amount;

o Writs;

o Repossessions; and

o Public record information, e.g. Proprietorships or Directorships.

Who would Access my Credit Record and When?

Prospective lenders will access your Credit Record when you apply for credit in any form. For instance, when you apply for a mobile phone plan, pay by the month insurance, an in-store card, a credit card, a personal loan or a mortgage, possible lenders will assess your Credit File to help determine your level of risk. They want to know how well you manage any debts.

Why You Should Familiarise Yourself with Your Credit File

Most people don’t know there is a problem, in the form of negative listings, with their Credit File until they have had a finance application rejected. By obtaining a copy of your Credit File from Low Doc Mortgages and familiarising yourself with the information contained within it, you can iron out any problems you may have (by paying out any outstanding defaults, judgements, and generally just getting your finances in order) so you can show the next prospective lender you deal with that you are worthy of receiving credit. In addition, it is a good idea to check your Credit File for any mistakes or fraudulent activity, and quickly report these to the credit bureau – most likely Equifax. Sadly, identity fraud is on the rise and people may apply for finance on your behalf, without your authorisation. They can damage your Credit File, so you must be vigilant and check your file at least once each year.