Three main credit reference agencies in the UK, Experian, Equifax & Callcredit, help lenders to assess an individual’s creditworthiness.
Information from one or more of these agencies is used before granting credit, in addition to personal details from the application form.
Your credit file is a reflection of your historical and current use of credit, and it’s advisable to check that it’s accurate every few months to improve the chances of being accepted for borrowing of any kind. Checking your credit file regularly will enable you to:
Correct any mistakes on your credit file
Errors can sometimes appear on a credit file, and if left unchallenged, can have an adverse effect on your credit score. Ask the credit reference agency to mark the entry as disputed, so that any lender will see that certain information is being queried, and may make allowances.
Reduce the chance of identity theft
Fraudsters can use your personal information to obtain credit cards, loans, and open bank accounts, so scrutinising your credit file every 2 or 3 months to see which financial institutions have requested information, will help to combat this.
Obtain a lower interest rate
People who have a low credit score may be charged higher interest rates on loans and overdrafts. Credit providers look favourably on consumers who have built up a healthy credit history by making repayments in full and on time, and they tailor their interest rate offers accordingly. By checking your credit file regularly, you can see how previous borrowing is impacting on your current chances of obtaining credit.
By keeping an eye on your credit file every two or three months, you stand a better chance of obtaining new credit, or loans at beneficial rates.