An impact on your credit history could be one of the unexpected consequences of recent, high-profile data breaches. With customers’ personal details being accessed from companies such as Sony and Facebook, fraudsters now have access to a huge amount of data.
It pays to be aware of your credit report. You can find out if your data has been compromised, and it will also help you understand your current credit status – which could turn out to be useful if you know you will soon be applying for a mortgage, loan or credit card.
The three main credit reference agencies (CRAs) are Experian, Equifax and TransUnion. They all have a statutory duty to provide consumers with a copy of their credit report and you can easily obtain a copy of your report online. It could be worth getting copies from all three agencies, because they may hold slightly different data, although there is bound to be significant overlap.
Lenders use the information in these reports to determine whether or not to grant you credit – and potentially what rate of interest will apply to you.
WHAT GOES INTO A CREDIT REPORT?
Your credit report will probably go back at least six years and will include:
- A list of all your current and previous credit accounts. This includes bank accounts, overdrafts, credit cards, mortgages, store cards and mobile phone contracts.
- Details of all late or missed payments. This will include details of other debts you have accrued, for example outstanding balances with utility companies.
- Records of any county court judgments against you, or if you have been declared bankrupt, had a home repossessed or entered into an Individual Voluntary Arrangement to clear debts.
- Details of any financial relationships, such as a joint mortgage or bank account.
- Whether you are on the electoral register.
It is worth paying attention to your credit history. If you have unpaid debts or a history of missed payments, you are less likely to get credit, at least at preferential rates. But there are other things that can count against you, including putting in a lot of credit applications in a short space of time or having no credit history at all.
Joint finances can also have a significant impact on your credit report, always carefully consider your own finances and those of your significant other or joint account holders before agreeing to open any joint accounts, particularly credit accounts.
You can use price comparison sites to do a ‘soft search’, which could help you find out which credit deals you are likely to be accepted for before putting in a formal application.
If the information held by the CRAs is incorrect, you can contact them to have it amended. It is also possible to add a note to your file, for example explaining the circumstances that led to a missed payment.
Credit reports should show if anyone has tried to apply for credit in your name. If this has happened to you, it is important to contact the agencies as soon as possible and alert the relevant financial company that this is a fraudulent application.
Most of these credit reference agencies also offer premium services for a monthly fee, which will alert you to any sudden change in your circumstances. This may be useful if you are concerned about your report or are preparing to make an important credit application.