Adverse Credit and Keeping Good Credit in the UK
Credit -- many of us take it for granted until
a problem crops up. Without credit, we would be unable to
buy a home, borrow money, or use credit cards. Here’s
a look at how credit works in the UK, to better help you manage
your credit. Most UK lenders and credit card providers use
their own methods of credit scoring to determine your credit
risk. Lenders are not obligated to tell you what your score
is, or how they determine it. They use information from your
credit or loan application and the information from your credit
record, which they obtain from one of the credit reference
bureaus. Your credit record contains information from public
records and current and past credit accounts. This includes
how much credit you have used, what types of accounts you
have had in the past and have now, and whether or not you
have paid your bills on time.
Tips to establish good credit
A little planning goes a long way when trying to establish
a good credit record.
Here are a few tips to help you.
- Pay your bills on time. If possible, ensure
that family members do the same.
- Bad credit behavior by a family member
can affect your good credit.
- Ensure that you are on the electoral register.
This confirms to lenders that the current and past addresses
in your credit report are accurate. The electoral rolls
are updated monthly.
- Establish a stable residence. Lenders
consider people who stay in one place for a long time to
be less of a credit risk than those who move frequently.
- Similarly, do not change jobs frequently.
Lenders like to see employment stability.
- Avoid making many applications for credit
in a short amount of time. This could be an indicator of
possible financial problems.
What to do if you are turned down for credit
If your credit file contains incorrect information, it may
affect your ability to get credit. If a lender turns down
your application for credit, wait before applying to another
lender. Instead, request a copy of your credit report from
each of the three UK credit reference agencies. They are:
Callcredit plc
PO Box 491
Leeds LS3 1WZ
Telephone: 0870 060 1414 |
Experian Ltd.
Consumer Help Service
PO Box 8000
Nottingham NG80 7WF
Telephone: 0870 241 6262 |
Equifax plc
Credit File Advice Centre
PO Box 1140
Bradford BD1 5US |
Write to the agency and enclose a cheque or Postal Order
for £2. Experian allows consumers to request their report
by telephone (0870 241 6262) and pay for it with a credit
or debit card. With your request, include your full name,
date of birth, address, post code, and any other addresses
at which you have lived in the past six years. You can also
request your credit report online from Experian (www.experian.co.uk)
and Equifax (www.equifax.co.uk). The agencies are required
to reply within seven working days.
How to handle problems on your credit record
When you receive your credit report, review it carefully.
If it contains incorrect information, contact the original
creditor. If you can prove that the creditor provided inaccurate
information, the creditor must update their records and notify
the credit reference agency within 28 days. If the creditor
does not do so, send written documentation about the problem
to the credit reference agency. They will investigate and
change their records if appropriate.
County Court Judgments (CCJs) remain on
your record for six years, regardless of whether you have
paid them or not. If you have repaid a CCJ, obtain a Certificate
of Satisfaction and send a copy to each credit reference agency.
Having this information in your file will reflect more favorably
on your record. Bankruptcies also remain on your record for
six years. If your bankruptcy has been discharged, request
a letter from the Official Receiver and send a copy to each
agency.
Does your credit file show missed or late payments? If you
have good reasons why you had missed or late payments, send
an explanatory note to the credit reference agency and request
that they include it with your file.
Once you have reviewed your credit record and requested
any changes, you can once again proceed to apply for credit.
If one lender refuses you credit, don’t despair. Just
because one lender turned you down does not mean all lenders
will. Many lenders specialise in offering credit to consumers
who have had past problems.
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