Credit file

What is a credit file?

A credit file is simply put a collection of data about how your are running your finances. Imagine a folder with your name and address written on the front. The contents are:

• Electoral roll information – publicly available information about your address and who else lives at the address
• Court records – records of all county court judgements are held here. If you have entered an  IVA or been made bankrupt this information may also be displayed here
• CIFAS – this contains information about any records of fraud
• Search records – records of every credit search
• Credit information – detailed information on your credit facilities and how you are running them
  • Name of lender
  • Type of debt – (loan/credit card)
  • Balance on the debt
  • Amount you are repaying
  • Payment history
  • If you take cash advances on your credit cards (WARNING: THIS IS NOT ADVISABLE)
  • Default information – this is normally registered once you have fallen behind on contractual payments

What is my credit score?

Your credit score is an indication of how you are currently managing your credit facilities. Banks, credit card companies, mortgage companies, insurance companies and even mobile phone operators will run a credit scoring application to assess your suitability for credit.

They will decide on your acceptance on their own internal credit scoring system. For example some banks may lend to those with a few missed payments, where as other banks will require 12 months worth of up to date payments before they will consider an application for credit.

Every company will have their own credit scoring criteria and this is why they advertise ‘typical rates’ as the true rate will be reflected by your own credit rating.

Am I on a Blacklist?

There is no such thing as a credit blacklist. It is a widely used term and indicates that there is a list of individuals who are not creditworthy.

This in fact is a myth and every lender will assess the credit application on its own merits. Multiple applications of credit and the fact that most companies may view the data as adverse may result in your application for further finance or credit being declined.

How to improve your credit file?

There are many ways to dress up your credit rating and ensure the banks do not see you as a risk. Whilst this may not work if you already have default information registered on your credit file it is a useful exercise for anyone wanting to improve their credit file information.

Electoral role

Contact your local council and get yourself on the electoral roll. If you are not on the electoral role it is impossible to lenders to verify your address.

Searching for credit

Always spread out any credit applications as too many searches in a short space of time can damage your credit rating.

This tells your creditors that you are making applications for credit and have no way of knowing if the application was accepted. This could lead to a large amount of credit taken out without any intention of paying it back. It also shows that you are desperate for credit.

Unfortunately the current credit application does not allow you to rate search so the more you search the more it will affect your credit score so if you are rejected order your credit file and find out why you were rejected and correct the problem before reapplying.

Repairing past problems

The best way to repair your credit file once damaged is to use basic credit and pay it on time. Now it sounds fairly obvious but most people will think once their credit file is damaged it is impossible to regain control.

Take a credit card and use it for your living expenses for example use it to pay for your petrol expenses and pay the balance off at the end of the month. This ensures that you stay within your limit, do not miss payments and it will show on your credit file that you have the ability to pay off your credit card in full.

Remember discipline is the key to maintain an excellent credit rating.

Dealing with credit trouble now

When dealing with debt and credit issues most of us will look at further loans or consolidation and credit card balance transfers to try and solve the problem. If you can find a lender to consolidate everything AND lower your repayments to an affordable amount then it is in your interest.

However if you extending the term beyond your mortgage or not lowering your payments you may want to consider whether the further advance will actually benefit you. Further borrowing is rarely the answer as you may just be moving debt from one lender to another.

Compile a financial statement and work out what areas you can cut back on and ensure payments are made to your priority creditors first. You can then pro rata payments to your creditors. Contact your creditors first and if that fails get professional advice.

Price Comparison

Before you contact the lender, compare the prices and rates on prices comparison websites. Do your research yourself and do not rely just on the bank/credit card company to provide you with the information.