Credit Scores – What you need to know

A credit score is a three-digit number that is used by lenders to help evaluate an application for a credit card, loan or mortgage. Your score is calculated by your credit report, which shows how you’ve managed credit in the past.

Who creates your credit score & report?

There are three credit reference agencies that all hold their own credit file and score on you:

– Transunion
– Equifax
– Experian

What is in your credit report?

The information held on your credit file and your credit application form might be used to decide:

• whether to lend to you
• how much to let you borrow?
• how much interest to charge you.

The most recent information on your file will have the most impact, as lenders will be most interested in your financial situation right now. That said, your financial decisions, good or bad, from the last six years, will still be on record.

If your credit report shows a few missed payments, you might be charged higher interest by lenders or might not be eligible for some loans.

This is because lenders believe they might be taking a higher risk when lending to you.

Your credit history can affect your ability to get things like insurance or whether you can get a mobile phone contract.

Regularly checking your report is a great idea, because it can help you spot any fraudulent activity or mistakes on your report.

How do you check your credit report?

Checking your credit file is nice and straightforward.

There’re three websites where you can check your report with each of the CRA’s.

The good news is that you can access your information for free, so you can open a free account with each of the following websites:

– Check your Transunion credit report with Credit Karma
– Check your Equifax credit report with ClearScore
– Check your credit report with Experian

Please Note: all of three of these are credit brokers, so they will recommend credit options based on your score, and they will also market a paid for service on their sites to gain more information held on you by them.

We recommend viewing all three reports if you have not done so for some time, as each lender uses a specific CRA or a mix of all three CRA’s. It pays to check all three CRA’s so you can be one step ahead of lenders.

What information is in a credit report?

The exact number of your credit score and report will differ between each of these agencies, as some have different information than others.

Whichever you check, you’re likely to see the following information:

• your name

• your address

• your date of birth

• some searches on your file, from things like credit applications and anti-money laundering checks

• your financial associations to other people – such as a joint mortgage/loan or bank account

• a summary of your current credit agreements, so how much you owe, and recent payments from borrowing such as loans, credit cards and even mobile phone contracts

• any late/missed payments or defaults on current or previous credit

• any County Court Judgments (CCJs) against you that are unpaid within one month of receiving the CCJ

• if you’re on the electoral roll at your current address

• if you have ever declared yourself as bankrupt or entered an IVA (Individual Voluntary Arrangement).