Credit report and score FAQs
If you haven’t come across the information before, the concept of a credit report can seem somewhat overwhelming at first, despite all of us being advised to check our report and credit rating at some point during our adult lives.
For this reason, we’re here to answer your most frequently asked questions (FAQs) related to credit scoring in the UK.
A credit report is a type of financial portfolio, filled with information on an individual’s credit history, which essentially refers to a person’s borrowing and repayment tendencies, from sources such as banks, government organisations and credit card companies. The data inside your credit report is provided by credit reference agencies (CRAs) – as explained in number 5 of our FAQs.
Credit reports include information about your credit accounts and personal details, and you can expect to see the following in most reports:
- Your personal information (name, date of birth, current and previous addresses)
- A list of your accounts
- People you’re financially linked to (financial associates)
- Your current account provider
- Public record information
- Electoral roll information
- Any fraud you’ve committed and any cases of suspected identity fraud etc.
When you apply for credit from a lender (for loans, mortgages, credit cards etc.), they use your credit history to gauge an idea of how much of a financial risk you pose and whether or not you are eligible to receive said credit. The purpose of checking your credit report yourself is to give you an insight into how you’re viewed in the eyes of these lenders, who use the information you see to determine your repayment behaviour.
Credit reports matter because they allow you to take more control of your finances once you know how ‘good’ or ‘poor’ it is deemed by lenders, and you are therefore able to make smarter financial decisions in order to improve your credit rating before applying for anything.
Using the information inside your credit report to improve your finances is important, because once you’re rejected for credit initially, your likelihood of being accepted in the future declines rapidly.
Is it unfair? Probably, but that’s why it’s so important to check your credit report before applying for any credit cards, loans or mortgages.
There are many ways of retrieving your credit report, but the level of detail does vary from one to another. Credit reference agencies (CRAs) provide your credit data to various credit checking websites online, which in-turn provide you with free credit reports (such as ClearScore, MSM Credit Monitor and Noddle/Credit Karma).
You can access many of these credit checking websites for free online, and signing up usually takes no longer than five minutes. They only provide you with some of the information within your full credit report which is held by the CRAs, but there are also paid subscription services (like with Experian Credit Expert) which give far more in-depth details from your report.
You are also legally entitled to a statutory credit report from each of the CRAs, as outlined in number 11 of our FAQs.
Each CRA gathers information from original sources (government organisations and credit card companies) to create a credit report, and later provides that report to authorised credit checking websites such as CheckMyFile, ClearScore and so on. You (the consumers) then use the credit checking websites to view your credit report to keep track of your finances.
The CRAs essentially act as sources of data for the credit checking websites.
Your credit score is a numerical figure based on the credit data found within your report, which represents your creditworthiness and how much a risk you pose to lenders when borrowing money.
Credit scores vary depending on which CRA the credit checking website has got its data from, as they all use different determining factors and scoring systems, but the general rule is that the higher your number, the more likely you are of being accepted for credit.
Each CRA has a different maximum credit score, as outlined below:
- Experian: 999 maximum credit score
- Equifax: 700 maximum credit score
- TransUnion: 710 maximum credit score
What your credit score is out of depends which CRA your credit checking website has obtained its data from, but there is usually a handy colour-coded scale to help you gauge a visual idea of where you are in comparison to the maximum score. Most websites will also explicitly state the maximum score, so you should be able to find out pretty easily.
As each CRA has a different top score, overall scoring system and determining factors, there is no ‘universal’ good credit score. However, we can give you the unique scales used by the main CRAs to determine whether your credit score is ‘good’ or ‘poor’.
TransUnion/Noddle credit score range:
- 0-550: Very Poor
- 551-565: Poor
- 566-603: Fair
- 604-627: Good
- 628-710: Excellent
- 0-560: Very Poor
- 561-720: Poor
- 721-880: Fair
- 881-960: Good
- 961-999: Excellent
- 0-279: Very poor
- 280-379: Poor
- 380-419: Fair
- 420-465: Good
- 466-700: Excellent
If your credit score is rated out of 700, it’s likely that it has come from Equifax data, as outlined in FAQ 8.
People with ‘Very Poor’ credit scores are likely to be rejected for most credit, whereas people with ‘Excellent’ credit scores are likely to get the best credit cards, loans and mortgages (although there is still no guarantee) with the best interest rates.
An officially ‘good’ credit score is anything from 420 and above with Equifax, 881 and above with Experian, and finally 604 and above with TransUnion (formerly known as Callcredit and provides data to Noddle).
Remember that your credit score is ever-evolving and is updating according to your current financial situation and repayment tendencies, so having a ‘good’ credit score doesn’t mean that you’re set for life.
Having a bad credit score with one reporting website doesn’t necessarily mean that your credit is completely poor; so if you’re unhappy with your score on one website, you should first check to see whether it’s consistently bad with other companies. If it is consistently poor, then you can start to interpret why that is.
Some credit reporting websites will explicitly tell you the factors impacting your credit score negatively, but not all of them. It could be down to many reasons, including:
- Having bankruptcies
- Missing credit card or loan payments
- Going overdrawn or over the agreed limit on credit cards or other accounts
- Not being on the electoral roll
Ways to improve your credit score in the UK include:
- Making payments on time (utility bills, credit agreements)
- Signing up to the electoral roll
- Closing unused accounts
- Cutting ties with financial associates that could have bad credit
- Closing inactive joint bank accounts
- Using a credit card little and often (build a credit history)
- Checking your credit report for mistakes or inaccurate information
- Getting your name on some utility bills as authentic forms of credit
For a better credit score, you essentially need to ensure that your repayments are paid in full and on time and you have a strong credit history by showing that you can be trusted with a credit card or loan.
We previously mentioned that you have a legal entitlement to receive a statutory credit report, but what exactly does that mean?
CRAs hold information on you from public sources and government organisations such as the electoral roll and Registry Trust, which is all placed within a credit report. You are legally entitled to view that information by requesting a statutory credit report, and although it is less detailed than a full report, it provides a good one-off insight into the data held on you by the CRA.
Within the statutory credit report, you can expect to see: your personal details, electoral roll information, searches made regarding you (for identity verifications etc.), and any court judgements, unpaid debts or bankruptcies.
A default (in finance) refers to the failure to meet the legal obligations listed in your loan agreement, such as failing to make a mortgage payment. Defaults as such are only taken off your credit report after six years from the date it occurred, but once those six years have passed, the default will be removed regardless of whether you’ve paid it off or not.
Even if you don’t pay it off, once the default is removed, the lender will not be able to re-register it and it will not return to your credit report.
A good credit score from one CRA doesn’t necessarily mean that you’ll be accepted for credit. Each CRA uses varied factors to determine your credit score, so you may even have a ‘good’ credit score with one bureau and a ‘bad’ credit score with another. What we’re saying is, even if you have an ‘excellent’ credit score according to one CRA, there’s still no guarantee that you’ll be accepted for credit.
When you’re rejected for credit, you have the right to know the exact reasons why your application was unsuccessful. The lender must either let you know that you have the right to ask about the reasons for your rejection, or explicitly list the reasons in a letter.
No one wants to read through dozens of reasons why they were rejected, in any walk of life, but doing so with regards to your credit application can lead to you making smart financial changes that will increase your chances of being accepted next time you apply.
How often your credit report is updated depends on which credit checking website you use, as their systems are updated with different timescales. A general trend shows that most services update every 7 or 31 days, with the some being updated more regularly.
You’re advised to check your credit score at least once a year, as the bare minimum, in order to keep your finances in order just as you’d check your utility bills or bank statement.
Most credit websites allow you to check your credit report as often as you like, without affecting your credit score, as long as it’s a ‘soft’ credit check. ‘Soft’ credit checks are not visible to companies and are what most websites use, but be wary of any ‘hard’ credit checks and avoid them if you can, as they can negatively impact your credit.
Mistakes occur on credit reports more than most people believe, which is just another reason why you should be checking your report regularly, as that inaccurate information could lead to your credit application being rejected.
If you find a mistake on your credit report, it could be down to a variety of reasons, but the responsibility ultimately lies with you to dispute and correct any errors.
You’re able to file a dispute with any CRA (or credit bureau) for free, although it may take some time. It’s important you file a dispute as soon as possible when you notice an error, and you should begin by contacting the provider that the error was associated with (whoever provided the inaccurate information).
The provider of the information and the CRA will contact each other and must agree that the information is inaccurate or written in error – which usually is the case – and then the data is amended.
You’re able to apply for credit whenever you like, even if you have a bad credit score, but your application is likely to be rejected if your credit history is poor.
Being rejected will in turn make your chances of being accepted in the future even more improbable, so be sure you’re confident with your creditworthiness before you make any applications, and remember, you can always improve your credit score before applying for any credit.
According to Experian, one of the UK’s leading credit reference agencies, bankruptcy will remain on your credit report for six years, or until you’re discharged – if that takes longer.
You are unlikely to be eligible for the best credit while you are bankrupt because it appears on your credit profile, and you’re also legally required to tell lenders that you’re bankrupt when you borrow over £500. It could also impact your ability to rent a property or be employed, as landlords and employers can also request to look at your credit details.
You may be able to receive credit, but you’re very likely to be charged sky-high interest rates due to the risk you pose as a lender.
When your bankruptcy clears, lenders are usually able to see that you’ve been bankrupt in the past – when you apply for a mortgage, for example.