Credit Referencing Agencies - How accurate are they?
One question I frequently get asked by clients is how and IVA or Bankruptcy will affect their credit rating. This is perfectly understandable, as in dealing with a financial problem, most people want to see their way out of the other side, but what about those people who on the face of it do not have unmanageable debt problems? What can they do if they are refused credit without explanation? This can be embarrassing, cause suspicion amoungst partners and family members, and just be extremely inconvenient in our ever increasing “borrow to buy” environment.
If you fall victim of a credit application being refused, you can check your personal file held with any of the three credit reference agencies - Experian, Equifax and Callcredit. It may be entirely possible that there are false entries on your file - either by mistake or you could be the victim of identity fraud. A full report of your credit file (on-line) costs between £10 and £15, or £2 if you are prepared to have it posted. You can also find out how you have “scored” which will indicate the strenth of your application in the eyes of a prospective lender. This may seem a bit “Big Brother”, but the banks are relying more and more on the sharing of data and it is just as well to know what is being held against your name and address.
In addition to an exceptional report, you can open an account with the agencies which will alert you of any changes to your credit report either by e-mail or SMS as soon as they occur. This involves the payment of a monthly subscription, and does allow you to access your credit file at any time to check on entries made. This is a useful and relatively cheap service for individuals who have either been discharged from bankruptcy, or successfully completed IVA’s, to actually monitor their credit repairing over a period of time.
Your credit file will include details of County Court Judgements, IVA’s, bankruptcies and also open credit agreements and bank overdrafts. It is perhaps odd, in these days of credit being freely available, that a note of too many credit checks by lenders may give out negative signs as to your creditworthiness. This should be especially noted by parties who frequently shop around for the best interest rate, as this is likely to result in several entries against your name which can ultimately affect your application.
In the unfortunate event that you do find entries which are incorrect on your credit file then you should write to the agency concerned and advise them of your position. You may well need to provide evidence - for instance if a debt has been repaid, or an IVA concluded - and this will either be posted onto your file or the adverse entry will be removed. In the event that your file has been tainted by a family member’s record living at your address, then you can submit a Notice of Disassociation - which has the effect of removing any link to you and the defaulter.
