Even if you haven’t had debt problems in the past, it is a good idea to check that the information on you held by credit-rating agencies is correct. The smallest of discrepancies on your record could have major ramifications when you come to apply for credit.
There are three main credit-rating agencies: Experian, Equifax and Callcredit. These agencies hold a vast array of information about you, including personal details such as your current and previous addresses and whether you are on the electoral register.
A credit report stores information on your credit accounts: bank and credit-card accounts, loan agreements and utility-company debts; overdraft arrangements on your current account; public-record information that could include any bankruptcies and individual voluntary arrangements (which stay on your record for at least six years); and the details of people you are financially linked to, such as a partner you have taken out a mortgage with in the past.
Even seemingly inconsequential errors in your credit history, such as a dormant bank account registered to an old address, or an old utility account that is £2 in debt, can create a red flag for future lenders. If you are applying for a mortgage in order to make an offer on a house, any refusal based on mistakes in your credit history could be extremely awkward.
If you find inaccuracies on your credit report, you can raise concerns with the agency, though it may be that you have to ask the original lender to make any changes. If there is an obvious inaccuracy they are failing to correct, you can report your concerns to the Information Commissioner’s Office.
It is also useful to see if you are still financially “linked” to anyone from your past, in the form of join accounts or joint mortgages, as this will stop his or her credit record affecting yours in the future. To “de-link” from someone, you need to write to or call the credit-reference agencies to request a “notice of disassociation”, or find the forms online. Before you cut ties, close down any joint accounts you have with the person, and make sure any joint loans are paid off.
Getting hold of your credit score should be straightforward. Credit-reference agencies are obliged to show you your credit report for £2, though some providers (including ClearScore and Experian) now offer this service for free.To request a copy of your report, write to the credit-rating agency and include your full name, any other names you have been known by in the last six years, your full address, any other addresses you have lived at in the last six years, your date of birth, and any necessary payment.
Although it sounds laborious, it can make sense to get a copy of your report from all three agencies. There will be a lot of overlap, but each agency could hold different information on you. And if you do discover that your credit rating is not as good as you had thought, go to MoneyAdviceService.org for suggestions on how to improve it.
Finally, if you are about to apply for an important loan such as a mortgage, it is a good idea not to have several recent checks on your report, as this can make it appear as though you are in need of vast amounts of credit. For example, if you are considering adopting the “current-account circuit” method, whereby you open a lot of current accounts at once in order to benefit from their interest rates, you might want to avoid doing this right before applying for a mortgage.
In the news this week…
• Rules designed to strengthen Britain’s banking system will be a headache for customers, says The Daily Telegraph. New ring-fencing rules mean banks must separate consumer-banking divisions from the rest of their operations. So some banks will now have to issue customers with updated sort codes to link their account with a newly created retail bank.
The first bank to take the plunge is HSBC, but Barclays, Lloyds, RBS and Santander customers will also get new bank cards by 2019. Around one million people will have their banking details altered. Standing orders and direct debits should be automatically transferred, but customers will have to update account details at online retailers and other services such as iTunes. Fraudsters will try to exploit the disruption, claiming to be getting in touch from your bank, so be especially vigilant during the changeover.
• “It’s turning into a rough summer for British holidaymakers,” says Anna Temkin in The Times. BA’s system problems at check-in are making it difficult to leave the UK, while tougher border controls on the continent are also causing long delays. Many travellers don’t know, however, that a flight delay of more than three hours that is the airline’s fault entitles you to compensation of up to £525 under EU law. But you have to apply – it is not paid automatically. Contact the airline’s customer-services department to start the process.
• British Gas has announced a 12.5% increase in electricity prices from 15 September. The typical customer on the company’s standard tariff will now be paying £1,120 a year, notes MoneySavingExpert.com’s Martin Lewis, who urges customers to move. “This is British Gas’s catch-up price hike. It was the only one of the Big Six firms not to raise prices at the start of the year.” That means that “if, as is possible, we see another batch of rises this coming winter, its customers will feel like they’ve been price-slapped twice in rapid succession”. Switch onto a fixed-price deal now and you can avoid any price increases for the next couple of years. As Lewis says, it’s usually pretty straightforward. Service isn’t interrupted and nobody needs to visit.