FAQ

What could be hurting my credit score?

• Missing payments and paying late. While lenders realize that many people miss a payment once in a while lenders consider missing 3 or more consecutive payments is an indication that you may never repay them.
• Low amount of credit. Indicates that either you are just starting to use credit or you have missed payments in the past. If you are just starting to use credit, lenders do not have information to evaluate how you typically use credit and repay your debts. Having a high amount of credit is a positive factor because it indicates to lenders that other lenders have trusted you by lending you money in the past
• High credit card balances. If debt is at the limit you lose points. Lenders worry that you are living beyond your means and may not be able to repay them.
• More than 2/3 credit cards. You lose points with more. ( Owing £10,000 on 5 credit cards is much worse than owing the same amount on a home equity loan.)
• All the same debt. You get a better score by mixing credit card debt with mortgage or car loans (paid off in a fixed time period)
• Paid off home - the grading system assumes you don’t own a home and you lose points
• Applying for credit too often. Each time costs you a few points.
• Multiple inquiries when an account is not opened indicates that you are being turned down, so you lose points. (Multiple applications within 30 days of opening an account are ignored if an account is opened) It is hard for the lenders to determine whether you are searching for the best offer or if you are desperately trying to obtain credit because of financial trouble
• A short credit history. Up to 7 years of credit history is considered short, and less than 3 years of history is considered too little.
• Never using your credit cards. The lenders cannot ascertain how you typically use credit and repay your debts. It could also mean that you have a ‘potential debt’ which, if used, could endanger your ability to repay debts.
• Co-signing loans can harm your credit score

Warning signs
• You are only paying the minimum on your accounts, or less
• You make late payments
• You are near the limit of your credit cards
• You are working overtime to keep up with payments
• You have received warnings about delinquent bill payments
• You don’t know how much you owe and you don’t want to find out
If you are stressed about money problems, the wisest thing to do is to get help form a debt management counsellor. The best time to seek help is before too many of these warnings start flashing


What is a credit score?

When you apply for a mortgage, car loan or credit card, a numerical assessment of your credit history (credit score) can determine whether you get to borrow money and at what rate

Credit reports are generated by three different companies— Lenders chose which criteria they need from these reports to generate their own individual credit score which they then use to make a decision about the credit-worthiness of a customer. Each lender has a different policy for credit assessment and may well have different scores for different products. Individuals who do not meet the credit-granting criteria of one lender can frequently still obtain credit from other organisations.

A credit score is a ‘snapshot’ of your credit risk picture at a particular point in time. It changes as you change the way you handle your debt. Past credit problems impact on your score less as time passes

The credit score is based upon many items, including if you pay your bills on time, ever had a bankruptcy, ever been sued, and if you’ve used your credit wisely. Scores range from the 300s to the 900s, but each extreme is rare. Most people fall into the 600s and 700s.

For lenders to consider a person an acceptable risk to offer them the best rates available, a person generally needs a mid score of 660 or better. People who fall between 620 and 660 are also considered acceptable, but their applications require greater scrutiny and they may not be able to get a rock-bottom rate

Late payments and charged-off accounts remain on your report for seven years; bankruptcies for 10. Most creditors, however, look for a pattern of payment rather than focusing on one-time or rare occurrences

If you have really bad credit -- perhaps even filed bankruptcy -- "The faster you begin to re-establish good credit, where you pay on time, every time the faster you'll improve your credit score."


Why should I check my credit history?
It is not the credit bureau's responsibility to make sure that your credit report is correct. Credit bureaus report what creditors tell them.
Your credit history may well contain errors, for example, your accounts may well have been open longer than your report suggests if lenders were slow to report them to the bureaus. Accounts may be reported as closed by the creditor and not by the consumer
Many people ask for their file regularly, conscious that errors or misunderstandings might lead to being declined for credit, causing inconvenience and embarrassment.
They will be prepared to complain and take action if they consider themselves to have been disadvantaged by inaccurate information or processing.
How do I check my credit history?
Order by Mail - You can order a copy of the your information by contacting the 3 credit bureaux. Each may well hold different information about you.
Equifax Credit File Advice Centre
PO Box 1140
Bradford
BD1 5US
Tel: 0870 010 0583 www.equifax.co.uk
Experian Consumer Help Service
PO Box 8000
NOTTINGHAM
NG1 5GX
Tel: 0870 241 6212 www.experian.co.uk
Call Credit Consumer Services Team
PO Box 491
Leeds
LS3 1WZ
Telephone: 0870 060 1414 www.callcredit.plc.uk

 Please include the following information when writing, and enclose payment of £2 with your request: (costs £8.25 online)
 Your full name, including title, forename, middle name and surname (and maiden name if appropriate)
 Any other name you have been known by
 Your date of birth
 Your current address, including house number/name, street name, district, post town and postcode
 Any previous addresses lived at during the last 6 years. List each address separately including house number/name, street name, district, post town and postcode
 Your signature
The report will include your personal details, current and previous addresses, credit accounts and history, any public records, electoral roll information and records of enquires and searches made by lenders on your file.

Within a month of your inquiry, the credit reporting agency should notify you of the results of its investigation. Full details can be obtained from the sites as to how to go about correcting any errors.


Identity theft

The number of reported identity frauds has doubled in the last two years.
In September 2003, Experian launched the first U.K. identity fraud alert service with online access to credit reports, CreditExpert. This service monitors activity and sends an alert by e-mail or sms text when potentially fraudulent credit activity has taken place. Online access to the full credit report enables clients to track changes and see who is searching their report whenever they want.
By catching potential fraud early, it is possible to greatly reduce the time and effort spent correcting a credit report and, in many cases, prevent the fraud before it happens.
Experian responds to more than a million requests for credit reports every year and helps many consumers with credit related issues, including providing assistance to the victims of identity fraud.
 

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