What is a Credit Rating or a
Credit Score?

When applying for a loan, credit card, mortgage or even just a mobile phone on a contract, lenders use a credit scoring (or credit rating) system to determine your eligibility for credit and the likelihood of you paying your bills/debts in a timely fashion. Your credit score takes into account several factors, good and bad, within your credit history including late and missed payments, CCJs, Bankruptcies, employment status, whether you are a homeowner or tenant... the list goes on.

This credit information is collated and gives the lender a "lend/don't lend" result depending on each companies lending criteria. As this criteria varies from lender to lender, just because you get declined from one company does not mean that you will be declined from another. Back to top

Who holds your Credit Score information?

Your Credit Score information is held by Credit Reference Agencies (CRAs) and in the main is provided by banks and other lenders detailing the manner in which you conduct any accounts you hold with them. Back to top

What Credit Score information do they hold on you?

Public Credit Information:

Electoral Roll information is gathered from each local authority and is used to confirm your name and address. No being registered on the Electoral Roll can count negatively on your Credit Score.

Details of any bankruptcies, defaults and/or CCJs against you are collated from the Registry Trust and are recorded on your file.

Most banks and building societies, credit card companies, mobile phone and mail-order companies as well as utility suppliers provide credit information about their customers to CRAs.

This information may include how much is owed, what terms have been signed up to and whether the account payments are on time or whether the account is in arrears or default. Back to top

Other Information:

In return for the financial information a lender provides to a CRA, that lender can search for information about you (assuming you have given permission).

Each time a lender searches for information about you with a CRA, this 'credit search' shows on your file. Your file may also contain information provided by lenders if your house has been repossessed or if you owe money and cannot be found (if you've moved away). Back to top

Is there a Credit Score 'Blacklist'?

No. This is a common misconception. Neither people nor properties they live in can be 'blacklisted'. CRAs do not assess your information they only provide lenders or retailers with the factual information they hold on you. It is then the lender's decision whether to grant you credit. Back to top

Who holds your information?

Your information is held by CRAs and in the main is provided by banks and other lenders detailing the manner in which you conduct any accounts you hold with them. Back to top

How is my Credit Score worked out?

Most lenders use a points system to assess whether to give credit. Using personal information such as age & marital status and financial information such as previous account conduct and current income, the lender will use a mathematical formula to create a score. Back to top

Each lender is likely to have its own formula so your credit score or rating could be different depending on which lender you apply to. This could mean that although one lender rejects your application, another lender with a different scoring system may accept the same application. Back to top

What if I'm refused credit?

Legally the lender doesn't have to tell you why you have been refused. Most lenders do sign up to the industry's 'Guide to Credit Scoring' which means they will give you a broad reason for their decision. However, not all companies have signed up to the guide. If you are turned down, you can appeal and supply further information to support your application but acceptance is at the discretion of the lender. Back to top

How accurate is the information held on me?

If you believe information held on you is inaccurate or you just want to check the information held you can apply for a copy of your credit files from each CRA. The statutory charge for your file is £2 and you will receive your file within 7 days. Once you have your file check it thoroughly.

If you believe any of the information is incorrect then write to the CRA and ask for the entry to be changed, explaining why and sending any evidence (make copies). The CRA has 28 days to act on your information and during this time your file will be marked as 'disputed' so anyone searching during this period will see that the information is possibly unreliable.

If the CRA decides not to make the correction you wish, you can send in a 'notice of correction'. This is your opportunity to state what you believe is wrong or to highlight any mitigating circumstances. For example you may have been made redundant and so defaulted on your mortgage while looking for another job. Back to top

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