Credit Rating

Before deciding whether to accept your application for credit a lender will run a check on your credit history. This is done by using Credit Reference Agencies who collect data relating to county court judgments, history of bad credit, repossessions, etc.

 

Some lenders will use a "credit scoring" system whereby they will ask you to complete an application form and allocate points to you depending on the answers given. For example, you may get extra points if you own your house or are in employment and have borrowed before.

 

Being turned down by one lender will not necessarily mean that you will be turned down by another lender as they all use different systems. Some lenders will ignore minor problems with credit in the past as long as your application shows a good employment history, income, etc.

 

Lenders do not have to tell you why you have been turned down other than explaining that you failed their credit scoring system or their decision was based on information received from a Credit Reference Agency. You can ask for the name of the Credit Reference Agency that the lender used to make their decision if you are applying for credit of £25,000 or more.

 

Regardless of this, it is possible to get a copy of your credit history, by applying directly to one of the Credit Reference Agencies such as Experian and Equifax. You can do this by writing directly to them sending a fee of £2.00 and giving your full name and address so that they can trace you on their records. The agency must send you a copy of your file within 7 days of receiving your request.

 

If the agency has a file for you, they must send you a copy of it. The file must set out the data that relates to you, the purpose for which the data is held and the type of people or companies it will be disclosed to.

 

If the agency's file contains incorrect information about you, it is possible to write to them and ask that they remove or change the information. Within 28 days of receiving your letter, they must either remove the incorrect entry, amend it or tell you why they have taken no action.

 

If the agency does not take any action to remove or alter the incorrect information held on you, then you can still write a statement setting out the correct position and ask that the Agency hold this with your file so that it is sent out every time someone requests your file.