Credit rating and how to repair it
You have no divine right to obtain credit. As you may have learned to your cost at some time or other. Go to a lender and they will take certain factors into account before deciding whether or not to loan you money. A lot of their information is supplied to them by credit reference agencies.
The main part of your credit report is your credit history. This lists your credit accounts, the date they were opened, the credit limit or loan amount, and whether you have missed any payments. Also included is public record information such as county court judgements, house repossessions and bankruptcies. Such information usually stays on your credit report for six years.
Check & Repair Your Credit Rating Now
As well as asking you for details of your income, employment status and assets, lenders use information from the credit reference agencies to assess how well you have handled credit in the past. You may also struggle to borrow money if you have never taken out credit before, or if you already have what the lender believes to be too many loans or credit cards.
So, is there anything you can do if you are refused credit? For a start you can ask the lender to reconsider if a decision was made just using a computerised credit scoring system, or if you believe you have further relevant information.Even if you have not been turned down for credit, it is a good idea to check your file regularly – perhaps once a year – to ensure the information held is correct.You have the right to dispute inaccurate information on your credit file, and to have errors corrected.
If you are still not satisfied, you have the right to attach a 200 word ‘Notice of Correction’ to your file, setting out the nature of your disagreement. This becomes part of your credit file. If the credit reference agency does not reply within 28 days, or refuses to process your Notice, you can ask the Office of the Information Commissioner to investigate whether it has breached the terms of the Data Protection Act, under which credit reference agencies are obliged to correct mistakes or add a Notice of Correction to your file without charge.
If there is evidence of fraud, contact the three credit reference agencies without delay. Explain the situation and ask that an alert be placed in your file. The lender should be able to advise whether you should notify the police. You may also wish to consider paying for ‘protective registration’. This is a service provided by Equifax on behalf of the Credit Industry Fraud Avoidance Scheme or CIFAS. It places a warning against your address which alerts lenders carrying out a search to request further information such as proof of identification before granting credit.
There are a number of firms that promise to ‘repair’ your credit for a fee, but the Financial Services Authority (FSA) says consumers should be very wary about them Debt advice charities such as National Debtline and the Consumer Credit Counselling Service can offer free advice about dealing with debts, county court judgements and borrowing money with an imperfect credit history.