What You Need to Know About Credit Reports

Whether you have applied for a mortgage or you need a new phone, you have a new job or want to buy a car, your credit history is important, and having good credit is very important. Before you can proceed with your house buying or phone contract, you will need to undergo a credit check to see how you have been spending your money and assess your lending risk. This check produces a report.

What is a Credit Report?

Credit reports are designed to chart your credit history and flag up any issues, and ultimately help lenders decide whether to accept your application or not. If, for example, you are thinking of taking the hire purchase route when you buy your next car, the dealership will request a credit report to ensure you are a financially responsible person to rent the car to.

Credit reports cover details such as how much you owe lenders, any late or missed payments, and any CCJs. They also look into whether you have been declared bankrupt in the past or whether your property has been repossessed.

There are three credit reference agencies in the UK that run checks and create credit reports: Experian, Equifax and TransUnion (formerly known as Callcredit in the UK). Each offers the chance to check your report online for free.

You may also come across other credit report services such as Noddle, which is part of TransUnion and is based in Britain, and ClearScore, a financial technology business that provides UK-based customers the opportunity to check their credit score and report for free. They allow you to check your credit scores by giving you access to the reports created by the three main reference agencies.

Noddle, for example, gives you access to your TransUnion score. While ClearScore lets you see your Equifax score for free.

Credit Reports: The Details

If you request checks for your credit with all three of the reference agencies, you will notice that there will be three very slightly different scores that come back. This is because some lenders will report to just one of the agencies, altering your score across Experian, Equifax and TransUnion. So, you may find that Experian has a different number to TransUnion because more lenders go with Experian.

Ideally, it is worth checking your credit report at least once a year. By doing this, you can assess where issues may have cropped up and look at ways to boost your score. Depending upon the agency you choose to get your report from, you can access a monthly report for free every month. For example, ClearScore gives monthly free access to your Equifax report, while Noddle updates weekly, so you can regularly check your score.

Whichever you choose, you will get an idea of your current rating. So, are you applying for a mortgage, getting a credit card or thinking of switching phone providers? If so, check your credit report first and get familiar with your score.