Beginners Guide to Checking your Credit Score

By: James Miller

When gathering info about this subject it is good to start with various definitions. A credit check is a kind of search carried out by a potential loan company to assess your eligibility for a loan. Loan companies will check your credit file to know your existing and earlier credit history. Loan companies can then give you a credit rating to check whether the manner in which you run your financial affairs fulfils their requisites for being granted credit.

Equifax is a important credit referencing agencies in the UK. Equifax collects all your credit details from a range of places to come up with a file that shows your personal financial history - i.e. your credit report. In the event you request for any kind of credit, lenders will look at you report to understand your financial record. You can get a copy of your credit report at any time so that you can confirm that everything is right. The Equifax online site has plenty of useful information on sensible credit choices and safeguarding yourself from fraud.

A Credit Score (Credit Rating) is a means that would-be lenders use for evaluating the credit eligibility of a customer. Loan companies will investigate the potential borrower's credit file, the facts and figures within their credit application and the level of borrowing required. Loan companies will then apply a numerical rating process to establish the level of 'risk involved in lending to the potential customer.

When you apply for any sort of credit, whether it is a credit or store card, a loan or a mortgage for example, you will undergo a credit check by the company who you are approaching for credit.

A credit check is a way for a financial organisation to view your past and current financial history, including whether you service your debts on time; are late with payments; or have missed payments. A credit check also shows other outstanding debts and any records of County Court Judgements (CCJ's) and other defaults.

This then gives the company a picture of what sort of financial risk you will be if they decide to lend you money - and what their chances are of them getting the money back! After all, no one wants to lend money to someone who pays it back late or not at all! This process is called credit scoring.

There are several bodies who hold this information about you - the most widely known are Experian and Equifax.

If you are considering taking out credit, get a copy of your credit file first. This means that you can check that all the data on it is correct and query anything that looks wrong. For example, even just one bit of wrong information - say your file shows an outstanding debt that has been settled - could mean the difference between getting approved for a loan or mortgage - or not.

To get a copy of your credit file you will need to contact one of the credit record agencies. You will be charged a small fee (around ?3) and a copy will be sent to you for your perusal.

Check that your credit file shows you on the electoral roll - if not, this will have a negative effect on your credit score. And financial associations - where maybe someone who has lived with you or has lived at your address previously has a poor credit rating - will affect your ability to get credit.

If you find information that is incorrect on your file, contact in writing the company who has listed incorrect data about you and send a copy to the credit record agency too.

If there is a financial association listed on your record that is not applicable, contact the credit record agency in writing. They will send you forms to complete so that the association can be removed from your file.

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