Get up to speed on your credit report
By Marianne Curphey
Do you really know what's on your credit report? According to a recent survey by Which?, many people have misconceptions about the content of their credit files and what banks and credit card companies use that information for. Understanding those elements is key to getting and maintaining a solid record.
In the survey, only seven people out of more than 1,000 correctly answered 20 questions about information that might appear on credit reports.
"People are still confused about what affects their credit rating," says James Jones, head of consumer affairs at the credit reporting bureau Experian. "If you don't delve into what is on your report, you will remain in the dark about your rating."
The reason that's important is because credit ratings are widely used -- by not only credit card issuers, but also other kinds of lenders and service providers. "A credit report is like your financial passport," says Tom Ilube, founder and managing director of Noddle, which offers consumers access to their credit reports. "Companies look at your credit report all the time and make decisions about you based on this information, from approving a mortgage application to giving you a mobile phone contract."
Sixty-three per cent of consumers surveyed in the Which? study had never checked their credit file. Many believe that credit reports are difficult or expensive to access. But that's a misconception. "Anyone can access their credit report as many times as they wish, and we urge consumers to look at their report regularly to maintain a clear picture of their financial situation," says Neil Munroe, external affairs director of Equifax, another credit reporting agency.
Equifax and Experian both abide by the Data Protection Act 1998, which states that you may ask a credit reference agency for your file, and they may charge you £2 for each request. However, they each also offer a premium product that allows you to receive updates, advice and fraud monitoring. Equifax offers a free 30-day trial for such a package, then charges £14.95 per month after that. Experian offers a free trial, then charges £14.99 per month after it ends.
While education efforts still have a long way to go, there has been some progress. "Back in the 1990s the only reason people came to us was if they had been refused credit and given our details by the lender," says Experian's Jones. "Now, the main reason is for people to check their report before applying for credit."
Published: 22 January 2014
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