Credit Checks

A credit check is the process carried out by a prospective lender to find out about your credit history and your current credit standing. In other words, how risky you are as a borrower.

What is the purpose of a credit check?

  • Lenders will assess you on the basis of your credit check to determine whether you will be able to repay the money they lend you.
  • Other companies like mobile phone or utility companies will run a credit check on you before offering you an account to make sure you will be able to pay for their services.

How is a credit check done?

Certain information about you and any existing credit agreements is held by a credit reference agency and any company wanting to make a check on you will make a request for the information. The main UK agencies are Experian, Equifax and Call Credit.

The credit reference agency will hold the following information about you:

  • Your address on the electoral roll
  • Any court orders against you for non-payment of debts
  • Bankruptcies declared against you
  • All current and previous credit agreements
  • Any recent applications you have made for credit

The lender will assess you on the basis of the information obtained. This determines whether you will:

  • be offered credit on standard terms,
  • be offered credit at special terms (i.e. higher interest, shorter repayment period), or
  • turned down for credit

How can you repair a bad credit history?

  • Get a copy of your credit report and make sure everything is up to date (for example, if you have paid a CCJ you may need to get a certificate of satisfaction from the court before it can be shown as satisfied.)
  • Explain any good reasons behind past problems by adding a notice of correction to your credit report.

How can you obtain your credit report?

If you are interested in getting a copy of your credit report, you can apply to an agency such as Experian, Equifax or Call Credit. They are obliged to send you a copy of your own credit report (for a small charge) within 7 working days.

These agencies let you order your credit report over the internet. For a higher fee, you can also see your report online.

Further information

You can check your credit record with one of the following three credit reference agencies:

  • Experian – www.experian.co.uk – You can order your statutory £2 credit report online, by phone, or in writing. Click here for details.
  • Equifax – www.equifax.co.uk – You can order your statutory £2 credit report online, or in writing. Click here for details.
  • Call Credit – www.callcredit.co.uk – You can request a copy of your statutory £2 credit report by post. Click here for details.
These agencies provide a range of credit reporting and monitoring services – check their websites for further details of what these services provide and cost.
It is important to keep a good history as this information is kept on file and is retrieved each time you apply for credit or enter a contract with monthly payments e.g. mobile phone contract. A good credit history essentially means that you are a low risk individual to lend money to and more likely to be successful in acquiring credit history.

Practical tips on keeping a good credit history

  • Never borrow money that you know you will struggle to re-pay
  • Always keep to the arrangements you have signed up to
  • Always pay at least the minimum payments required on your cards
  • Do not constantly apply for credit and not take it up
  • If your circumstances change for the worse let your creditors know immediately

Further information

You can check your credit record with one of the following three credit reference agencies:

  • Experian – www.experian.co.uk – You can order your statutory £2 credit report online, by phone, or in writing. Click here for details.
  • Equifax – www.equifax.co.uk – You can order your statutory £2 credit report online, or in writing. Click here for details.
  • Call Credit – www.callcredit.co.uk – You can request a copy of your statutory £2 credit report by post. Click here for details.

These agencies provide a range of credit reporting and monitoring services – check their websites for further details of these services and costs.