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Understanding your credit report and credit score

Understanding your credit report and credit score
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Understanding your credit report and credit score can be key if you want to keep your personal finances healthy. It means that you can confidently apply for credit, or even find out if you have been a victim of fraud.

What is in your credit report?

Your credit report is basically your financial CV. It is a record of your financial life, including accounts you hold, money you have borrowed and information about your identity. It is there so lenders can confirm you are who you say you are and that you are a reliable borrower.

So what exactly is in your credit report? Let’s break it down:

  • A list of your credit accounts – bank and credit cards, loans and utility company debts
  • Details of anyone financially linked to you, so anyone you have taken joint credit out with
  • Information like CCJs, house repossessions, bankruptcies and IVAs
  • Your current account provider and any overdraft details
  • Whether or not you are on the electoral register
  • Your name and date of birth
  • Current and previous addresses
  • Whether or not you have committed fraud, or if someone has stolen your identity and committed fraud

You’ll find all of this information broken down in your report. So it is worth checking that all of the information on file is correct.

Any details on fraudulent actions will be held under the Cifas section. Cifas is a national fraud prevention scheme and it can place markers on your credit report to highlight if you have been a victim of impersonation.

How do you check your credit report?

There are three credit reference agencies (CRAs) in the UK: Equifax, Experian and TransUnion.

You may be wondering why there’s more than one CRA. Well, not all lenders share data with all three CRAs. So it is worth checking your credit report with each one because they may well differ depending on what lender has shared what information.

It is possible to check your score for free, as all CRAs have an obligation to provide you with a copy of your credit report without charging you. Alternatively, each of the agencies has some sort of full credit monitoring service that you will typically pay for after the initial trial period.

Is a credit report different from a credit score?

In a nutshell, yes. Your credit report is different from your credit score. In fact, you do not have a universal credit score.

If this has just blown your mind, then let me explain. A credit score is an assessment by a particular lender about whether or not you are a risk to lend to. It is entirely based on their own assessment criteria.

You may well find that the CRAs provide you with a ‘credit score’. But in reality, this is just an indication of what your credit score could be with a lender based on the information they have.

If you have a ‘good’ credit score, there is no guarantee that your application will be accepted and that you will be offered the headline rate. That is purely down to the lender and whether or not they are happy to lend to you. That said, the better your credit score, the bigger the chance you will be able to borrow money.

How do I understand my credit score?

As we have covered, there is no universal credit score. So understanding it can be quite tricky. The scores you get from each of the credit reference agencies will all be different.

So here’s a basic overview of how each CRA presents scores:

  • Experian – Scores are broken down into five categories: very poor (0-560), poor (561-720), fair (721-880), good (881-960) and excellent (961-999).
  • Equifax – Scores are out of 900. Good is 400-474, and excellent is anything between 475 and 900.
  • TransUnion – TransUnion has a slightly different system. Scores are out of 1,000 but are accompanied by your credit rating. So you will also have your ‘overall credit worthiness’ scored as a number from one to five.

If you are unhappy with it, then there are ways to improve your credit score.

Using credit wisely also has the potential to help build or rebuild your credit. Credit-builder cards can help you get on the right track. Check out our list of top-rated credit cards for bad credit in the UK to determine what is best for you.

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