What is a credit score?

If you apply for a loan, or any form of credit for that matter, then the first thing your lender will look at is your credit score. This will help them to decide whether or not to accept your application.

The credit scoring system checks the credit scores of everyone, regardless of their role or position, and gives the lender an idea of how responsible they are with their money and whether or not they’re likely to pay their lender back.

There’s a variety of free credit score check websites that people across the UK use to check their credit scores before applying for a loan – just Google ‘free credit score check’ and take your pick!

What if my loan application is declined?

If you apply for credit or a loan and your application is declined, then it’s likely that you haven’t got a great credit score.

You can ask the credit or loan provider why they’ve declined your application, and whilst they’ll have to tell you the credit reference agency they got your credit score from, they aren’t legally inclined to tell you the reason why they’ve declined your application.

Think you’ve been unjustly declined for a loan? You can ask the lender to review your application but, unfortunately, instances of credit providers changing their minds once they’ve made a decision are few and far between.

Can’t I just apply for a loan somewhere else?

You can – all lenders and credit providers use their own credit scoring systems and approval criteria, so there’s a chance you could get declined by one lender but approved by another.

Can I get a copy of my credit history?

Under new 2018 GDPR legislation, you’ve got the right to view information held about you by credit reference agencies any time you wish.

To see a copy of your statutory credit report, just apply to one of the three main credit score agencies below; most of them offer a month’s free trial.

It’s worth remembering that to get an accurate statutory credit report you’ll need to give them as much information as possible about you, including your full name (and any previous names you have used), and all the addresses you have lived at during the last 6 years.

Credit reference agencies

Here are contact details for each of the three main credit reference agencies:

EXPERIAN

Website: www.experian.co.uk

Tel: 0344 481 0800 or 0800 0138888

Post: Experian Credit Expert,

PO Box 7710,

Nottingham

NG80 7WE

EQUIFAX

Website: www.equifax.co.uk

Tel: 0843 455 0136

Post: Equifax PLC,

Capital House,

25 Chapel Street,

London

NW1 5DS

TRANS UNION

Website: www.transunion.com

Tel: 0330 024 7574

Post: One Park Land,

Leeds

LS3 1EP

What information do the credit reference agencies keep?

• Electoral roll entries.

• County Court Judgments – held for 6 years unless the judgment is paid in full within one month.

• Bankruptcy orders, administration orders, debt relief orders and Individual Voluntary Arrangements (IVAs). All of these are held for 6 years from the date the order or arrangement was approved.

• Credit accounts – a record is held until the account is paid off and then for a further 6 years.

• Defaults on a credit agreement – a record is held for 6 years from the date the default was registered, normally when the account is 3 to 6 months in arrears.

• Mortgage repossessions, including voluntary repossessions. These are held for 6 years.

• Aliases, associations and linked addresses. Any other names you have been known by, previous addresses or correspondence addresses and whether you share financial links with another person.

• Warnings from the Fraud Prevention Service (known as CIFAS). CIFAS is a fraud avoidance system designed to protect people whose names, addresses or other personal details have been used fraudulently by others in order to obtain credit. If you have been the victim of fraud, additional checks are likely to be carried out when you or someone claiming to be you applies for credit.

• Information from the Gone Away Information Network (GAIN) if you’ve gone away without informing your lenders of a forwarding address. This information is held for 6 years.

• Any previous credit searches that lenders have carried out within the last 2 years. Several searches within a short period could be an indication of over-commitment or attempted fraud.

What should I do if they’ve got the wrong information about me?

If any of the information held about you is incorrect, you should write to your lender or the credit reference agency to ask for the information to be corrected. When doing this you should explain why the information they’ve got isn’t right and supply accompanying evidence to prove this.

The credit reference agency should respond within 28 days explaining if your information has been corrected or removed or, alternatively, why they won’t change it.  

Another thing you can do is add a Notice of Correction to your credit file. This essentially allows you to add up to 200 words to explain why you might have missed payments in the past, although this should only be used for things that were out of your own control e.g. loss of job, serious illness etc.

Doing this means that any lender who looks at your credit file can at least understand why you might’ve missed payments for reasons you couldn’t control, rather than just seeing numbers on a screen.

If you’d like further help, please contact our Advice Team on 0800 316 1833.