Busting popular consumer myths about Credit Reporting


Blacklist - There is a credit 'blacklist' which all lenders check to find out if you have failed to keep up with repayments.

There is no such thing as a credit 'blacklist'. Credit Reference Agencies (CRAs) collect data from a number of sources to ensure a balanced view of your personal circumstances, which is then used to create your personal credit. The lender, be it a bank, building society, telecoms company or credit card provider, will then use this information, along with the information you provided on your application to decide whether or not to grant credit.

Remember; different lenders have different lending policies.

Changing your credit report - Once something has been entered on my credit report it is very difficult to have it changed.

Actually it is very easy. If you find inaccurate information on your personal credit report, you should tell the credit reference agency you obtained it from. They will contact the credit provider and ask for the entry to be corrected. Alternatively you can contact the lender direct and highlight the incorrect entry.

If the credit provider maintains that it is their belief the information is correct you can still add a note to your file disputing the entry. This note has to then be taken into account the next time you apply for credit.

Credit Rating - If your credit report shows you have a good credit rating, you can get credit from any lender.

Your credit rating is an expression of creditworthiness based upon present financial condition and past credit history.

It does not guarantee that you will obtain credit; no one has an automatic right to credit after all! Lenders may refuse to offer credit for a number of reasons. Your credit history may suggest that you could struggle repaying credit. Also lenders often ask for additional supporting information when you apply for credit, such as your current income, and it may well be that this information leads to your application being declined.

Different lenders have different lending policies and can refuse an application without giving a reason, but most have codes of practice that say they should give you the main reason if you ask e.g. OFT guide to credit scoring.

No lender is allowed to refuse you credit on the grounds of your race, sex, religion, sexuality or address.

Decision making - Credit Reference Agencies, like Callcredit, make a decision as to whether or not you can have credit.

Your credit report is used by lenders to make decisions about whether to grant you credit and services.

Lenders use the information held by CRAs as part of their application procedures but other considerations are also taken into account.

The information you provide at the point of application is equally important, as is your existing relationship with the organisation you are applying to.

All organisations have their own internal policy on lending and only they can make a decision about whether or not to accept your application.

The credit reference agencies do not make the final decision as to whether you are granted credit.

Electoral Roll - It doesn't matter if I register on my local electoral roll as this has no impact on my ability to get credit.

The Electoral Roll plays an important part in lenders being able to verify your identity during a credit application; therefore it is important to ensure you are registered correctly.

There are two versions of the Electoral Roll - the 'full' and 'edited' Registers. The full register is used for voting, the prevention and detection of crime, and for checking applications for credit. The edited register is available for general sale and can be used for commercial activities such as marketing. Your name and address will always appear on the full register but you can choose on your registration form whether you wish to appear on the edited register.

The benefits of appearing on the edited register are three-fold - for companies, it's a good way to tell customers and prospects about new products, services and special offers that can save them money; for charities, it's an economical way to raise awareness and much needed support, and for consumers, Direct Mail is a convenient way to shop from home...to take their time and make good decisions without pressure, and to get the products they want and need - often at less than they'd pay in shops.

People you live with - The people you live with have an impact on your credit rating. If they have a poor credit score or a CCJ against them, it will mean you get refused too.

The only people taken into account when you apply for credit are yourself and anyone you already have a financial link with e.g. a joint mortgage or current account. People you live with will not automatically have an impact on your credit worthiness.

Your credit report will show any people you are linked to and who are therefore taken into consideration when you make a credit application. If your credit report shows people you are not linked to you can ask the CRA to remove their information from your report, this is called a financial disassociation. If the credit reference agency agrees that your credit report shows a financial connection that is no longer correct it will be removed.

Searches - The number of searches you make has a significant impact on your credit report.

The number of searches appearing on your credit file no longer plays a significant part in a credit decision by a lender. While a small proportion do factor this in, there are many other, more significant factors such as how much you can actually afford that will play a greater role in determining a lender's decision.

Checking your credit report will give you a clear view of your personal credit history.