Your Credit File and Loans

By Michael Strauss

There are many factors which determine whether you're able to get a cheap loan deal or not. Your age, income, residential status and current debt levels all play a significant part, but one of the most important things lenders take into consideration is your credit history.

Credit File

Every time you apply for credit, are approved for finance, make a repayment or miss a repayment, this information is recorded by companies known as credit reference agencies, and stored on your own personal file for up to six years.

Whenever you next apply for credit (whether that be a credit card, a loan, or even an overdraft), the lender will search this file to see if there's anything on it that might influence their decision (such as bad debt, a history of repeated late payments etc).

Accessing Your File

If you find that you are being rejected for credit, and you aren't sure why, you can get hold of a copy of your credit file by sending a written request to the credit reference agency (addresses below) along with a nominal charge of around 2. This should show you whether you have any damaging information stored on it.

Corrections

If you find that your file contains incorrect information, such as showing a default on a loan when you've in fact settled it, you have the legal right to have these errors corrected so long as you can prove that a mistake has been made - a letter from the lender confirming that the debt has been settled should usually be enough proof.

ID Theft

You may find entries on your file which you don't recognise at all, such as missed payments on credit cards that you've never applied for, or defaults on debts you've never taken out. If you see anything like this, contact the bank concerned immediately as you could have become a victim of identity theft and the sooner you alert the banks the less damage may be caused.

Cleaning Up Your File

You may find that you have some small debts marked as unpaid on your file that you've comletely forgotten about. Often, lenders such as catalogue companies or book clubs will simply mark a small debt as unpaid and then write it off as a bad debt rather than go to the expense of trying to recover it. If you find anything like this, contact the company to arrange payment and the removal of this information from your record. Also ensure that no entries relating to family members or previous occupants of your home are present.

Once you've done all this, you may find that your credit rating has improved sufficiently to let you once more be approved for a decent loan deal.

Credit Reference Agency Contacts

There are two major credit reference agencies in the UK, and for your convenience here are their addresses:

Experian
Customer Help Service
PO Box 8000
Nottingham
NG1 5GX

Equifax Europe Ltd
Consumer Affairs Department
Spectrum House
1A North Avenue
Clydebank
Glasgow
G81 2DR