How can I check my credit score for free?

2nd July 2018

Click HERE to obtain your free credit report!

Mortgage lenders ALWAYS check your credit report. The problem for consumers is that there are four credit agencies, and not every lender checks every credit agency. While one might show details of the Default you picked up 4 years ago, the others may not! Crazy isn’t it?

Fortunately, there is a way for us to check all four credit agencies at the same time – effectively allowing us to see all the information that a mortgage lender could see, which in turns means we are in a better position to source the most suitable mortgage for your circumstances.

Click HERE to obtain your free credit report. You have to sign up to a free 30 day trial, but you can cancel at any time simply by logging in and sending them a secure message, by phone or by email – so no hard sell!! If you decide to keep the service after your trial ends, it only costs £14.99 a month.

What your credit report says about you: How to check up on whether you look like a good prospect

Here’s a simple fact – if you have a good  report, you could save yourself a lot of money.

Or, looking at it from the other side, if you have a poor  history you might be paying out a lot more on credit cards, loans, mortgages and other credit agreements than you otherwise might have been.

This is because a credit rating affects the deals and interest rates you will be offered, so making sure yours is as good as possible pays off.

What is a credit report and why does it matter?

When you apply for credit – such as hire purchase on a car, a credit card, mortgage or loan – the lender takes a look at the information on your credit report.

This will most likely be from one or more of the three main credit agencies in the UK.

That information includes things such as whether you make payments on other accounts on time, the  limits on your credit and store cards, and how many applications you have made recently.

What do they use this information for?

They use this information, along with what you have put on your application form and details they have if you are already a customer, to give you a  score which they use to decide whether or not to accept your application.

To check how you stack up yourself, you can take a look at your  report, which typically gives you a  score. Your  score is an indication of how lenders may view you, based on the information in your credit report. The higher, the better.

If you have missed payments or have lots of credit then you are probably going to get a lower score than someone who manages their money better. That’s because a lender is more likely to think you are going to be more of a risk.

Want to buy a car on HP?

Now let’s imagine you need a loan to buy a car. If a lender is offering a loan at a preferential rate, they are probably only going to offer it to someone with a higher credit score – someone they think is more reliable.

People with lower credit scores often end up with products that have higher interest rates and that means higher payments.

And your credit score can affect everyday goods and services such as broadband and mobile phones, where you apply for a contract when you sign up. People with poor  scores are more likely to get turned down for the best deals.

That’s why it pays to check your credit report, correct anything that’s wrong and try and improve it.

What information is on my credit report?

Your credit report will include the following information for lenders to check:

  • Your name and date of birth.
  • Electoral roll information to verify your identity at each address you have lived at and track your lending history.
  • A list of your credit accounts including when they were opened. The  limits or loan amounts on mortgages, credit cards and loans. Even accounts closed and settled in the past six years will be listed.
  • Details of your current account overdraft is usually included but information on any savings or investments you have will not be seen.
  • How many searches have you made?
  • Information about any previous application searches.
  • Whether you have missed any payments or been late repaying – and the amount of times this has happened.
  • Any financial links to other people – this refers to where you have had or applied for joint credit rather than the fact that they are a partner or family member.
  • Public records showing whether you have any history of debt problems such as bankruptcies or CCJs – again going back at least six years.
  • It will also include information about whether your identity has previously been used for fraud – this will be through a Cifas notification

Anything else?

With the rise of direct debit monthly billing, which in many cases is essentially credit if you use the service before you pay for it, utility companies have started providing information about customers to credit reference agencies.

Some utility providers will only supply information on any missed payments or defaults and others may supply full records including payments made on time. If you want to know if this is the case for your supplier, contact them and ask.

What do you see vs what lenders see?

Lenders

Whenever you apply for a mortgage, credit card, loan or a contract, such as for a mobile phone, then the company you apply to will look at your report to see if you are likely to be a good customer.

But just what sort of information do they look at and why does this matter to them. And what does it say about you?

There’s a lot of information on your  report – companies could look at how many other loans or credit cards you have, whether you have made all your payments on time and if you are on the electoral register. These things help them see how you manage your money and also prove where you live.

But how do they get from point A – your application – to point B – the final ‘yes’ or ‘no’?

Take an example

When you apply for credit – let’s use a new credit card as an example – you give the card company permission to look at the information on your  report. They use this, along with information on your application and information they might already have, to decide whether to give you the card you are after.

Your financial behaviour changes your  rating. You may see a score on your  file when you check it with a credit agency but this is a guide for you and not what the lender uses.

Instead they calculate their own score. They will all have a different formula for doing so, but typically the higher you score the lower the risk you are considered and thus the better deals and rates you get offered.

How have you managed your money in the past?

Lenders will look at how you have managed money in the past, how much available credit you are using, how many applications for you have made recently and also any financial links to others. They also want you to be on the electoral register.

You will gain points for having borrowed money and paid it back on time in the past and sensibly used credit.

You will lose points for missing payments or taking out too much .

And there are a couple of interesting things to remember as well:

They all score in different ways

1. Every company will score you in a different way. So one company may accept you and another may not, with exactly the same information.

2. Sometimes it’s not just a straight ‘yes’ or ‘no’. Your report may instead affect how much  you are offered, or the interest rate it is at.

Now that you can see how lenders use the information in your  report, the key is to make sure you keep the negatives to a minimum and make the most of the positives.

Your  score is not ‘static’. It changes over time as your financial and personal situation changes. Make sure you keep up-to-date with payments and get on the electoral register. These are just some of the things you can do.

What you can see

Checking your file is relatively simple and it doesn’t have to cost a lot. Referencing agencies have to supply a hard copy of your statutory  report by post if you request one for a one-off fee of £2, but you can also pay to use their services and keep a regular eye on your credit report, with some offering a free trial.

Your report shows if there is anything that could be dragging down a  score. It could be due to only one thing or a combination of lesser reasons.

Take your time and study the report

It is important to comb through reports carefully, as even a simple mistake could stop you from being accepted and in some cases it could even be a fraudulent application using your details that is to blame.

Each company’s report will look slightly different but most have the similar sections to navigate through the information.

Depending on the type of service you use, the credit reference agency may give you a score with your credit report.

This represents where you stand. It isn’t the exact one lenders use as they all have their own methods of evaluating your information, but it gives you a good idea of what they are likely to think of you.

 

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