Your credit rating is the method a creditor uses to assess whether they want to lend you money. All creditors will use different information to assess you and will score you differently.
What Is A Credit Report?
Your credit report, or credit record, provides information about your past financial behaviour, and your current financial position.
It shows your past and present credit arrangements, showing when you borrowed money and if you paid it back on time.
The information is gathered from banks, building societies, credit card companies, mobile phone operators and any other company that provides credit facilities or financial contracts.
Your credit report also features information drawn from other sources, such as your name, address, whether or not you are currently on the electoral roll, if you've ever been declared bankrupt, CCJs made against you and any default notices you may have.
Credit Reference Agencies
There are three main credit reference againcies; Experian, Equifax and Callcredit.
When you apply for credit, the provider will request your credit report form one of these providers. As each Credit Reference Agency uses slighlty different methods to formulate your credit score, they each provide a slightly different report.
How Does My Credit Report Affect Me?
If you apply for credit, the potential lender will request your credit report from a credit reference agency. A poor credit report may result in your being rejected.
A good credit report however, could result in you being offered better interest rates and the best promotional offers, as you are seen as a low-risk borrower.
How Can I Improve My Credit Rating?
If you have a poor credit rating, there are several steps you may be able to take to help improve it.
Correct any factual errors. Complain directly to the agency involved, if they reject your complaint go directly to the Financial Ombudsman.
Register on the electoral roll. This will instantly improve your credit rating.
Ensure there are no links to ex-partners on your credit report. Their bad behaviour could damage your own record.
If you don't have much of credit history, take out a credit card. Just make sure you pay off your balance every month.
