This debt advice applies to individuals in the UK with personal debts.
Your credit record or credit history shows information regarding debts you took out, how you manage repayments, and the status of each debt.
Your creditor decides whether to approved or reject your loan or credit through a credit check on your credit file. Thus, it’s very important to check your record and review if the information registered is all accurate and error-free. Furthermore, it’s also useful when you want to find out how much debt you owe.
What is a Credit File?
Credit files are set by credit reference agencies from the details shared by your creditors or lenders, accompanying additional public information that relates to you and your debt. A credit score is determined by calculating the numerical values on each of the details consisting your credit record, which are all registered in your credit file.
When creditors conduct a credit review, they are likely to rely on your credit history rather than your credit score. This is because your credit history contains broader details and significant information.
How Can Credit File Help Creditors and Lenders?
- Carry out ID checks to make sure you are who you say you are
- Check you live at the address you’ve given them
- Decide the terms of any credit agreement with you
If a creditor decides that the information on your credit file means you may be a higher risk, they could:
- Refuse you credit
- Offer you a smaller amount of credit, or,
- Charge you a higher interest rate
How much does it cost to access my credit file?
The most convenient and reliable way to find out about your debts is by checking your credit file. Your credit file contains records of your debts and other public details shared by your creditors or lenders.
If you wish to check your credit file, there are three credit reference agencies that you can trust in the UK:
- TransUnion or previously Callcredit
Information Shown in Your Credit File
- Your name and other names you’re known or you’ve used previously, and date of birth
- The amount you owe and the status of each debt
- Any delayed, incomplete or missed payments
- Latest or previous default notices, as well as defaulted accounts
- county court judgments or CCJs, decrees and money claims or judgment against you
- Records of home repossession or secured debts
- Details of insolvency that includes bankruptcy, IVA, and DRO.
On the contrary, as most people assumed it doesn’t show the amount of money kept in any of savings accounts, your net income or disposable income, or details of student loans obtained after the year 1988. Also, it does not include your council tax arrears, or any of your parking fines, as well as criminal or medical records.
How long does information stay on my credit file?
Details about missed payments, default notices, or CCJs will remain on your credit for six years. After this, this information will be removed from the file regardless of whether the paid is paid or not.
Below are the details that remain in your credit file for six years from the time it was registered:
- Defaulted accounts
- Debt either paid in full or settled
- Reduced payment for the debt and partial settlement or writing off the remainder
- Bankruptcy, DRO, IVA or protected trust deeds
If you have bankruptcy restrictions prolonged because you’ve been determined to have committed dishonesty or negligence, this can remain on your credit file for 15 years.
if you happen to hear from a friend about being blacklisted, making it impossible to obtain credit, then this isn’t true. There’s no such thing as a credit blacklist. Creditors and lenders based their judgment on the information they can see on your credit file. Other than that some creditors and lenders may have some measures also in place to determine your creditworthiness.
The truth is, creditors and lenders, do not necessarily look into your credit score when conducting a credit check. Instead, they would look into your credit history. If you have a good credit history, it shouldn’t be hard for you to obtain credits or loans. In contrast, there are some other creditors or institution who focuses on building credit for people with bad credit standing.
Home Addresses and Your Credit History
Your credit history pertains to the credit that you utilized. It does not involve your financial history nor the people who lived in your home. Thus, this does not affect the credit of the people you live with or you’ve lived before. However, in the case of joint debt, the negligence of one can affect the other person.
Linked Credit Files for Joint Debts
If you’ve obtained joint debts, your credit file will then be linked or associated with the other person’s credit. This means if any of you missed payments or failed to keep payments up to date, both your credit will be affected. This happens for individuals with joint loans, or when you acted as a co-borrower or guarantor.
If you possess any joint accounts covered in your credit file but you have no connection to the person concerned, you can request to have your credit files to be ‘disassociated’.
This eliminates the link connecting your credit file and the person concerned. However, this will only be possible if the person has paid the debt in full and you no longer reside with the person involved. To appeal for disassociation, you must directly contact the credit reference agencies.
Credit File Details Are Inaccurate
You can reach out to either the credit reference agency or the creditor or lender and inform them to update the record.
My Job and Credit History
Some employers conduct credit checks for new or existing personnel. This is only common for jobs involving the financial services sector.
However, if you believe that your credit file might affect your job or career, you can talk to your union rep, or HR department privately and discuss the possibilities at stake.
Getting A Mortgage with A Bad Credit
A mortgage lender will check your credit file and may reject you a mortgage. If they approved, you are likely to get a higher interest rate considering your poor credit history.
Renting A Property with A Poor Credit History
Several landlords or leasing agents conduct a credit check to access your credit file.
They may deny you a tenancy, or they can request a guarantor if not a higher deposit. Some landlords only scrutinize public information such as the public registers of court judgments or insolvency. This can mean that any record of missed payments or defaults to your other debts does not necessarily yield any impact.
Will my credit affect my car insurance?
Insurers will scrutinize your credit file, and if you pay in monthly installments there’s a chance that poor credit can result in paying a larger rate of interest. In our practice, it’s very improbable that poor credit records will prevent you from obtaining an insurance policy.