✅ Understanding Credit Ratings & Credit Files
What Is a Credit Rating?
- It’s a score based on your financial history that lenders use to decide if they should lend to you.
- The higher your score, the more likely you are to get credit at a better rate.
- Different lenders have different scoring systems, so being rejected by one doesn’t mean you’ll be rejected by all.
How Is Your Credit Rating Decided?
- Credit scoring systems assign points based on information you provide and what’s in your credit report.
- Lenders also consider your income, employment, debts, and previous payment history.
🗂 What Credit Reference Agencies (CRAs) Know About You
There are three main credit reference agencies in the UK:
- Experian
- Equifax
- TransUnion
They hold information on:
- Your address history and Electoral Roll registration.
- Court records like CCJs, bankruptcies, IVAs, or Trust Deeds.
- Your payment history on loans, credit cards, etc.
- Any repossessions of homes or other properties.
- People you’re financially linked to (e.g. joint accounts).
- Any fraud alerts or CIFAS markers.
- Previous credit searches (applications you’ve made).
⏳ Data is usually kept for 6 years.
🧾 How to Access and Check Your Credit File
You are legally entitled to a free statutory credit report from each agency.
- Visit:
- Experian
- Equifax
- TransUnion (via Credit Karma)
📍 Always check your file before applying for credit.
If anything is wrong or out of date:
- Write to the CRA to correct it.
- You can also add a “notice of correction” to explain missed payments or financial hardship.
🛑 If You’re Refused Credit
What You Can Do:
- Ask why you were refused — the lender must tell you and which CRA they used.
- Don’t apply to lots of lenders at once — each application leaves a mark on your file.
- Use a guarantor — someone who agrees to repay if you can’t.
- Try a credit union — they’re often more flexible than banks.
- Look into other funding options like:
- Government support
- Charities
- Budgeting tools
- Debt help organisations
⚠️ Credit, Fraud, and CIFAS
If you’ve been the victim of fraud, a CIFAS marker may appear on your credit file:
- It won’t automatically stop you getting credit, but lenders will ask for more ID checks.
- CIFAS must notify you if there’s a warning on your file.
🛡 Payment Protection Insurance (PPI)
If you’re considering Payment Protection Insurance:
- It covers repayments if you’re sick or lose your job.
- Not suitable for everyone (e.g. self-employed or pre-existing conditions).
- You don’t have to buy it with your loan. Compare providers.
📋 Credit Application Checklist
Before applying for credit, ask:
About you:
- Can I afford the repayments?
- Will my situation change (e.g. job loss, new baby)?
- What’s the best repayment method?
About the credit:
- What’s the total cost?
- What’s the APR?
- Are there extra fees (setup, early repayment)?
- Will the interest change?
- Do I need to secure the loan on my home?
- Can I take the agreement home to review?