Credit reference agencies and credit reports

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1 Freephone Credit reference agencies and credit reports What this fact sheet is about This fact sheet explained what credit reference agencies are, what they do and your rights. Use this fact sheet to: understand credit scoring; deal with being turned down for credit; work out how debts will affect your credit report; and challenge incorrect information on your report. This fact sheet includes: some useful contacts and links for you to get further help. What is a credit reference agency? Credit reference agencies hold information about your credit agreements (including any arrears), rent agreements, sheriff court decrees and electoral roll information. A lender or landlord can only pass on information about your agreements with your consent. You usually give this consent when you sign the agreement. Failure to obtain your consent is a breach of the Data Protection Act Sheriff court decrees will automatically be registered and are kept on record for a period of six years. The information a credit reference agency holds about you is known as your credit report (or file). Extra advice: no blacklist Credit reference agencies provide factual information with your consent, so that a company can make a decision about whether to lend you money. They do not have a blacklist of people who should not be given credit. Page 1 of 10

2 Credit scoring When being considered for credit, a lenders may take into account factors such as your age, occupation and whether you are a homeowner, (the information you give them on your credit application). Lenders often assess this information and the information on your credit report using a process known as credit scoring. They will also take into account whether you are on the electoral register. This may be an important part of the lender deciding whether to give you credit. Information: the electoral register You can apply to go on the electoral register at any time of the year. See vote or contact your local council. You should also update your details if you move house. The lender may give points to each piece of information it has and then add them up to give you a credit score. If you do not score above the particular company s pass level then you may well be turned down. The score might take into account the information on your credit report. Each lender has their own policy guidelines that they follow when making lending decisions. Every time you apply for credit a search by the lender is marked on your credit report. Searches stay on your file for different times depending upon which credit reference agency was used. Experian and Equifax hold search entries for 12 months and Callcredit for up to 24 months. Ask the lender if they are using a credit score to decide whether to give you credit. If the company uses a computerised system, you should be given broad information about how credit scoring works and the type of things they have taken into account in the scoring system for that company. If you are turned down the lender should tell you if you didn t pass. They should also tell you if you were turned down for any other reason, for example, because of the information held on your credit report. Extra advice: computerised scoring If the decision was made solely using a computerised scoring system you can ask the lender to look at your application again. This review should be done manually and not using an automated system. You may have to supply extra information to support your application. Guarantors When you guarantee a credit agreement, this means if the person whose name the agreement is in does not pay, the creditor can ask you to pay. Credit reference agencies would not normally record a credit agreement on a guarantor's credit report if payments are up to date. If payments are missed, any default or decree could be recorded on the guarantor's credit report. What do I do if I have been refused credit? If you have been refused credit, then you should ask the lender which credit reference agency was consulted and whether the credit reference agency s information was the reason for the decision. Contact this agency and ask for a copy of your credit report under the Data Protection Act They will require your full name, current address, date of birth and any previous addresses that you have lived at for the past six years. Page 2 of 10

3 This costs 2 by letter or over the internet. You can go on the credit agency website and choose to fill in a form to have your report sent to you in the post. Your report should be sent to you within seven working days unless the agency needs you to send proof of your identity and address, for example, if you have moved home recently. You can also choose to ask to see your report online. Information: Information Commission The Information Commission publishes a booklet called Credit explained. If you have not yet had a copy, contact us for advice. If the information is incorrect then you have a right to ask the agency to remove or correct the information. There are three main credit reference agencies, Experian, Equifax and Callcredit. You should check the information held by all of these agencies as some information may be different. Experian Ltd Consumer Help Service PO Box 9000 Nottingham NG80 7WF Phone: Equifax plc Credit File Advice Centre PO Box Leicester LE3 4FS Phone: Callcredit Ltd Consumer Services Team PO Box 491 Leeds LS3 1WZ Tel: Can I appeal against a lender refusing me credit? Unfortunately, there is no automatic right to credit. Some companies are starting to provide details as to why you have been turned down, which can help you establish the reasons. If credit scoring was used then the company should give you broad reasons for refusing you credit. Page 3 of 10

4 Also, you may be able to ask for a manual decision if the initial decision was made by computer. See the earlier section Credit scoring. However, you are still only legally entitled to receive the name of the specific credit reference agency the lender consulted. You can always contact the company again if information on your credit report has changed and ask them to look at your application again. Otherwise it may be a case of shopping around for credit, making sure you are very careful to check the interest rates and terms of any loan you are offered. Warning: applications for credit Be careful: every time you make an actual application for credit a 'search' will show up on your credit report. It can work against you if lots of searches show up on your report. Searches are held on file for 12 months by Experian and Equifax and up to 24 months by Callcredit. When will information be removed from my report? The credit reference agency will leave the information on your report for at least six years. Information held by agencies includes the following. Credit accounts in default These details are deleted after six years from the date of the default. Settled accounts These are deleted six years from the date the account is settled or when the last payment is made unless a default was registered. Bankruptcy orders Bankruptcy orders are normally deleted six years from the date of the bankruptcy order, unless you are subject to a bankruptcy restriction order (BRO) or undertaking (BRU) which lasts longer than six years. In this case the bankruptcy order will be removed once the BRO/BRU ends. If you have not been discharged from your bankruptcy, the bankruptcy order will remain on your credit report until it has been discharged, even if this is longer than six years. Sheriff court decrees These are deleted after six years from the date of the decree, whether or not they have been pai. Trust deeds Trust deeds are normally deleted after six years from the date the trust deed was set up. Student loans Old 'mortgage style' student loans details are passed onto credit reference agencies. This can happen even if you have deferred the loan or made an arrangement to pay the loan back. Page 4 of 10

5 Mortgage debts and secured loans You may be in arrears with your payments but have made an arrangement to pay or have had a possession order suspended by the court. In these cases the details may not show up as a default on your credit report as long as you keep up with the payments. Otherwise a default may be registered by your lender. Details will stay on the credit reference agency s files for six years from the date the default was registered which could be the date of a repossession order or when you handed the keys in to your lender. In some cases, details of how much you still owe will also appear on the file. This may affect your ability to get a new mortgage, especially if you still owe money to your previous lender. Warning: mortgage debt This does not mean that your mortgage debt is written off after six years. Mortgage lenders may try to recover a mortgage shortfall for up to 20 years. Since July 2010, the Council of Mortgage Lenders (CML) no longer keeps information on people who have been repossessed or handed the keys in on their home. This information used to be kept in a mortgage possessions register and passed on to credit reference agencies. Existing information will stay on credit reference agency files. Information on your mortgage or secured loan may still show up on your credit report. You can check your file in the usual way. Your file should be marked as satisfied if you pay the mortgage arrears off or if the sale of your house covers the outstanding debt. If you clear any mortgage shortfall, your file should also be marked as satisfied. See our fact sheet: Mortgage shortfalls. Notice of correction You can ask the credit reference agency to put a notice on your report of up to 200 words, explaining why you got into debt or why you think information on your report is misleading. You may want to explain your financial circumstances at the time and why your situation is now different. This notice will then be seen by anyone reading your report such as a lender making a search of your credit report when you apply for credit. Most credit decisions are made by automatic means (for instance, computer). If there is a notice of correction on your report your application must be referred for a manual decision (for example, a person will decide whether or not you can get credit). Page 5 of 10

6 Can details of other people s credit be included in my report? Credit reference agencies should not include information about other people who happen to live with you in your credit report, even if you share a surname, unless a financial connection has been created. This means other people s credit details should not affect your credit rating. Your credit report should only include: financial information about you; the name of anyone you have a financial connection with at your address (but not any financial information about that person); and the date and source of the financial connection. Warning: financial connections If you have a financial connection with someone lenders will be able to see more information about that person on your credit report, for example their credit history and credit agreements, than you can. Your report will only say that you are linked to that person. This means that your financial details will not appear on anyone else s credit report unless you have a financial connection. Your report will continue to show you who has accessed your details and when this happened. You will be treated as having a financial connection to someone else where a lender tells the credit reference agency: you have made an application for credit in joint names; a bank account or other credit product has been opened in joint names; or you tell the credit reference agency that you are financially linked to someone else. This will continue until you file a notice of disassociation to end the financial connection between you. Information: linked addresses Credit reports will also include a linked addresses section with details of any previous addresses that you provided when applying for a copy of your report and other addresses you have been connected to. Disassociation notices There may be information on your report about people who you have no financial connection with or who no longer share a financial connection with you (for example, an ex partner). You can write to the agency to disassociate yourself from them explaining your reasons. You will need to fill in a form giving details about the people you want removed from your report. If any agency refuses to accept your notice you can ask the Information Commission for help. The address is in the Useful contacts section at the end of this fact sheet. Complaints about credit reference agencies You have the right to complain to the Financial Ombudsman Service about how a credit reference agency has dealt with your credit file. You will have to follow the agency s complaints procedure first. The address for the Financial Ombudsman Service is in Useful contacts at the end of this fact sheet. Page 6 of 10

7 You can also complain to the Information Commission under the Data Protection Act They can look at issues such as why a lender or credit reference agency has not corrected information on your file, or where a credit reference agency has refused to add a notice of correction. The address for the Information Commission is in Useful contacts at the end of this fact sheet. The Scottish Register Almost all sheriff court decrees are recorded on the Scottish Register and kept on the register for six years. If you are unsure whether you have any sheriff court decrees or whether the decrees are on the register, you can make a search against your name and address. You do this by filling in a form with the correct name and sending in the form with the correct fee. Extra advice: search fees As the fees are high to search the Scottish Register, it is quicker and cheaper to contact a credit reference agency and check your credit report first. There is a scale of fees to pay for each search for the same name. The register holds limited information. It will tell you the name of the court, the date, the amount of the decree and who the decree is against. It may also list the case number. It will not have the name of the creditor or pursuer. You would need to ask the sheriff court for this information. The contact details for Trust Online that holds the information on the Scottish Register is in Useful contacts at the end of this fact sheet. Paying the order off If your decree has been fully paid, you can ask Trust Online to mark your entry on the register as satisfied. There is a fee of 4 for this which you must send to Trust Online with evidence from the pursuer that the debt has been paid in full. Provide details of the decree such as the case number, the date of the decree, the creditor etc. Trust Online will then pass the updated information on to the credit reference agencies. The entry will only be removed if: you pay off the debt within one month of it being entered on the register; or the decree is 'set aside' or recalled by the court. This is only possible in very limited circumstances such as if you did not know about the decree because you did not receive the court papers and you have a valid defence to the claim. Page 7 of 10

8 See our fact sheet: Decrees in the sheriff court - applying for a recall. Information: how long will a decree stay on the register? The decree will stay on the register for six years from the date of the decree. If, in the meantime, you have satisfied (fully paid) the decree, this will be shown on the register. Victims of fraud and identity theft If you feel you have been a victim of fraud it is important to act quickly to prevent further fraudulent transactions. Report the loss or theft of any documents, cheques, plastic card and online fraud to the card issuer or lender immediately. The card issuer or lender should investigate any fraud for you and freeze your account. Report the fraudulent activity to Action Fraud. See Useful contacts at the end of this fact sheet. This ensures proper crime reporting procedures are followed. They will pass information to the Police for you who will issue a crime reference number if appropriate. Contact one of the credit reference agencies to notify them of any items on your credit report you believe to be the result of fraudulent activity. The agency you contact should inform the other agencies for you. The credit reference agencies should then cooperate to send you copies of your credit reports, advice on protecting yourself from identity theft and tell you who is managing your case and how to contact them. The agencies should also contact lenders for you if fraudulent applications for credit have been made in your name and make sure your credit report is corrected. Consider registering your details with CIFAS, the UK s Fraud Prevention Service. For a fee, a fraud warning can be placed against your address and will be flagged up if applications are made using your address. The CIFAS marker will mean additional checks are made to ensure any application for credit is genuine. This may result in delays in your credit applications. Contact CIFAS for further information. You can download the online application at For general advice on identity theft check the government website Page 8 of 10

9 Can credit repair companies help me? You may have heard of companies that offer to clear your credit records with credit reference agencies to allow you to apply for more credit. Credit repair companies may charge you a fee and often send you an information pack telling you how to get your copy of your credit report and clear sheriff court decrees. Warning: costs of credit repair Be careful, you may be paying a company for something that you can do yourself. You need to be very careful before paying a fee to a commercial company who suggests it can remove decrees for you. If you apply to the sheriff court to set aside a decree and you do not have a real reason to do so, then you could be charged costs by the court. Credit repair companies must be authorised the Financial Conduct Authority (FCA). Check if the company is authorised before using their services. If you have a complaint about something a credit repair company has done from October 2008 onwards, you can ask the Financial Ombudsman Service for help. If you are not happy with a credit repair company complain to the local trading standards department by contacting Citizens Advice Consumer Service. Useful contacts Action Fraud Phone: Citizens Advice Consumer Service Phone: (self help from Citizens Advice and help contacting Trading Standards) Financial Conduct Authority Phone: consumer.queries@fca.org.uk Financial Ombudsman Service Phone: or ombudsman.org.uk The Information Commission Phone: Page 9 of 10

10 Trust Online Phone: Business Debtline endeavour to keep our fact sheets as up-to-date as possible, however, we cannot be held responsible for changes in legislation or for developments in case law since this edition of the fact sheet was issued. Business Debtline is part of the Money Advice Trust. Monday Advice Trust Registered Charity Number A company limited by guarantee. Registered in England and Wales (Number ). Registered office 21 Garlick Hill, London, WC4V 2AU. Copyright Business Debtline Page 10 of 10