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Experian and Equifax Explained

By: Jennifer Lowe - Updated: 17 Sep 2012 | comments*Discuss
Experian Equiface Credit Reference

There are two main credit reference agencies in the UK Experian and Equifax. These agencies hold information such as, details of unpaid bills, county court judgements (CCJs) and any applications you may have made in the past for credit, which make up your credit history.When you apply for credit, lenders use the records held by credit reference agencies to make a decision on how risky a borrower you are. The decision is based on the lender's own credit scoring system. Credit reference agencies don't score your 'worthiness' themselves and have no information on the criteria that lenders us e.

The Information

Agencies hold a variety of different information on individuals. You must make sure you are listed on the electoral roll as this is used by the agencies and lenders to check that you really live at the address you claim.

The problem here is simply that every time a search is made on your credit file, a footprint is left and too many footprints can also go against you when you apply for future credit. However, shopping around for credit cards should not be recorded on your file unless you sign a credit agreement. If a lender does carry out a search and you didn't sign an agreement, you can apply to have the footprint removed by contacting each of the credit reference agencies.There are some things that aren't included on your credit report, such as council tax payments and student loans.

If you are turned down for credit and don't know why, your first port of call should be to check your credit report. This can be done simply by contacting Experian and Equifax - and for a small fee they will send you a copy of your credit file.

My Report

The report that you receive will allow you to see exactly what lenders use to determine whether you are a risky borrower. If you have been refused credit then going through this report with a fine tooth comb is the best way to figure out why.If there is a mistake on your credit file, such as a search that has been made without your permission or you are being financially connected to an ex-partner, then you need to get this updates. Simply write to each credit reference agency wand inform them of the mistake that has been made, then once this has been removed your credit score will improve.

You do not have a single credit score or rating. Each lender, whether it be for a personal loan, mortgage, credit card or mobile phone contract, will use a different system for working out your credit score.

Equally, these lenders do not have to tell you how they calculated your score, however, you can ask for a simple explanation of how it works and why you have been refused credit.

There are many myths surrounding credit ratings, the most common one being that your score is affected by people you live with. This isn’t true. Lenders treat everyone as an individual, so living in the same house as someone has absolutely no bearing on your ability to borrow.

However, if you are financial linked with someone through, for example, a joint bank account, then they’re activity may have a small impact on you credit score. It is difficult to pinpoint exactly what makes a good or bad credit rating because there are so many things that can potentially make an impact. The most common ones, however, are missed payments on past debts, multiple loans and bankruptcy.There is also identity fraud, if someone has taken out a credit agreement in your name and failed to keep up the repayments your credit rating will suffer.

The most important this to remember is to keep your credit report as up-to-date as possible. The best way to do this is to get a copy of your report from each of the three biggest agencies in the UK – Experian, Equifax and Callcredit. Once you receive them, go through them with a fine tooth comb and double check that all of the information they hold about you is correct because even the slightest mistake, such as a wrong flat number, can have a huge impact.

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This happened to me. I had been refused a loan and I was confused as to why because I've always had good credit and have never been in debt. The loan company suggested that I get a credit check. I did, I I went through the report and found that i was being likned to my ex husband whos credit was terrible. I had to write to each company that was on the report and correct it, once I had done this my credit went back up and I was granted the loan. It was a pain but it was worth it.
creditgal - 23-May-12 @ 10:26 AM
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