If you’re applying for any kind of credit or even trying to rent or buy a home, then you’ll know all about the importance of the dreaded credit check. If you have poor credit, then you’ll find that everyone from banks to letting agents to car insurers favour those with good credit.
However, your credit record is like the weather. It’s ever changing, and so sometimes it can be better or worse than you think it is. So read on for why and how you should check your credit record on a regular basis.
Information on Your Record
Credit reports detail every line of credit that has been extended to you, including information about your repayment history. This includes overdrafts, loans, credit cards, and even mobile phone contract payments. It also includes current and previous addresses, CCJ’s or bankruptcies, electoral roll information and your name and date of birth. It doesn’t include any personal information such as criminal convictions, religion or salary, but the information that is contained in your report is used to create your overall ‘credit score.’
Checking your Record
Keeping abreast of changes in your credit rating can be a time consuming job, but as you take on new debts or pay off old ones, then your record should be updated by credit reference agencies accordingly. However, this doesn’t always happen as it should, and mistakes are made. This is the main reason why it’s so important to check your report. Failure to do so can badly impact your score.
Once you have ordered your report from one of the main credit reference agencies such as Equifax or Experian, you should go through it with a fine toothcomb looking for errors.
Unfortunately however, credit records can be complicated to understand, so alternatively it’s a good idea to use a company such as who provide you with your full credit report along with clear explanations on how lenders are using it to make decisions. This is invaluable if you’re trying to take out a loan.
If you do see an error on your file, then you have every right to ask for the mistake to be amended. You should write to your creditor with evidence that the debt has been paid or does not exist, and ask them to update their records. The creditor is then also obliged to inform the credit reference agencies of the update to their records.
Alternatively, you can write to the credit reference with evidence of the error. The agency should then investigate it, and make the necessary changes to your file.
Notices of Correction
In some cases, you might have a legitimate reason for any defaults, such as sickness or redundancy. If so, you can ask for a notice of correction to be added to your report. Write no more than 200 words explaining the reason for a default and send it to the agency. This will then be attached to your file.
Wendy Lin is a successful female businesswoman and experienced financial planner. She owns two business finance companies in the states.