Credit Report

A credit report is a very important collection of information gathered on every person who borrows money in any form. This includes the mortgage on your home, loan for your automobile, credit cards and so forth. Almost all creditors report your payment history each month to a credit reference agency, who then updates your file. If you pay every bill on time every month, you will have an excellent credit rating. However, once you get 30 days or more behind on a financial obligation, this will start to show up on your credit report and can have negative consequences.

What Kind of Information Does a Credit Report Contain?

All credit reports have the name, address, birth date and other personal identifying information for every person who has borrowed money in any form in the UK. Credit agencies update demographic information annually, with the exception of changes of address which are recorded as soon as they receive them from your local authority.

In addition to your basic information, the credit report will contain your payment record with each creditor who reports it. There are four classifications your account may fall into: settled, which means repaid and closed; active, indicating an open account that is being paid according to terms; defaulted, showing an account that is in arrears; or delinquent, which is an account that is at least three months in arrears or has been during the past 12 months. This information is kept on file for six years.

The final section of the credit report is referred to as the Public Record. This is where information such as judgments, repossessions and bankruptcy that is obtained from the Registry Trust (an organisation managed by the Lord Chancellor’s Department) is listed. A judgment against you will be removed if it is paid within 30 days and you can provide a certificate of satisfaction. If you pay the judgment after 30 days have passed, it will remain on your credit report but be marked as ‘satisfied.’ If you declare bankruptcy, this information is published in the local gazettes and credit reporting agencies will obtain it from there. A bankruptcy remains on your record for six years from the date of the order.

How Your Credit Report Can Affect You

Your credit rating affects whether lenders will do business with you and what terms they will offer if they do accept you. If you have a poor credit rating, the lender may impose higher interest rates or different contract terms than he or she would offer to a person with better credit. It is therefore vitally important to your financial future to pay your bills in a timely manner and to not take on more debt than you can repay. In spite of your best precautions, however, errors on credit report do occur and it would be worth the effort to monitor your report.

How to Obtain Your Free Credit Report

Every citizen in the UK has the right to inspect their credit report once a year to determine if there are any errors contained in it. In the days before the Internet, this was a long process. You had to write to the credit reporting agency and wait for them to mail you back your report. Then, if there were errors, you had to correct them and mail it back again. Now it is a simple process. You just need to do an Internet search for Experian or Equifax, the two main credit reporting agencies in the UK. Once you have selected which company to obtain your report from, just go to their website and enter the requested information. You will be able to see your report instantly and notify Experian or Equifax of any errors. You may do this annually without any charge, which makes monitoring your credit activities very easy.