How To Check Your Credit Rating

How To Check Your Credit Rating

You’ve been refused a loan. Or you can’t extend the credit on your credit card. And you can’t work out why. Find out more about how to check credit with our guide:

What is a credit check?

A credit check is carried out by a financial organisation before it decides to lend you money.

Why does a finance company check credit?

Before a lender decides to lend you money, they will want to be satisfied they will get their money back. The method they use to look at your credit rating.

What is the difference between a Credit Rating or Credit Score or Credit File?

Nothing – they provide the same information but with different names. Another term that’s frequently used is credit report.

How does a finance company access your credit rating?

You will consent to a lender being able to access your credit rating when you fill in your application for credit. It is unlikely that a lender will process your application without being able to access your credit rating.

What does the credit rating tell a finance company?

Your credit rating will provide the finance company with a broad understanding about how you’ve handled your finances in the past.

How is a credit rating created?

There are a number of Credit Reference Agencies in the UK that compile credit histories from different sources. These include:

  • Electoral Roll – to verify your address and length of occupancy
  • County Court Judgements – to find out if you have not been able to repay debts in the past
  • Other financial organisations – to see how well you have handled your finances

Who decides about my credit rating?

The Credit Reference Agencies used a sophisticated algorithm that resolves to a number score. This information is then passed to the financial organisation from whom you want to obtain credit. It is the financial organisation that decides whether or not to grant you credit depending on their own criteria.

How to Check Credit

Under the Data Protection Act, you are entitled to find out the credit information held about you. To check credit, contact one of Credit Reference Agencies (above) and, for a nominal charge (around £2), they will provide you with information they hold about you.

Find out why you have been refused credit

If you have been refused credit by a financial organisation, you have the right to find out why. The Data Protection Act, enables you to ask for a review of your application if you have been refused credit – and your credit rating was a factory that influenced the decision.

Why should you Check Credit?

If you feel you have been unfairly penalised, you should check your credit rating to see if it is accurate. There may be mistakes that have been made in creating the rating.

Prepaid Credit Cards

Prepaid Credit Cards

Here is a list of Frequently Asked Questions about Prepaid Credit Cards.

What Is A Prepaid Credit Card?

A Prepaid card is exactly the same as a credit card except that you pay the money before you spend it rather than afterwards. There is no credit on the card: the money you spend with the card is the money that you have already put onto it. When the money has run out will be unable to use the credit card.

Example Of Prepaid Credit Card

Here is an example of how a Prepaid credit card works:

You wish to spend £500 over the next month and so you add £500 to the balance of your Prepaid credit card. You are now able to spend the £500 as you wish. Once the £500 has been spent, you will no longer be able to use the Prepaid credit card until you have added more money to it.

How Much Does A Prepaid Credit Card Cost?

There are a large number of Prepaid credit card providers and most of them charge an application fee of around £10.00. However, some are free.

What Are The Monthly Fees For A Prepaid Credit Card?

There are usually no monthly fees or charges for a Prepaid credit card.

What Other Charges Are Associated With A Prepaid Card?

Charges may apply if you top up your Prepaid credit card, and these vary according to the card provider and where the top lot was made. For example, just like credit cards, and there is a charge levied when A Prepaid credit card is topped up at an ATM the machine. However, many providers do not charge when a card is topped up online or at a bank counter.

Some card providers also charge a percentage or fixed amount of the transaction.This varies from a standard rate of £1.00 to 3%+ of the track transaction amount.

Can I Top Up A Prepaid Credit Card?

Subject to the status of your account, you will be able to reuse your Prepaid credit card indefinitely by topping up when the balance has run out.

How Do I Top Up My Prepaid Credit Card?

You can top up your Prepaid credit card in a variety of ways:

  • Online
  • High street bank
  • Post Office
  • Phone

Prepaid credit cards provide you with the flexibility of paying a pre-agreed amount on to your card every month through direct debit, or paying a proportion of your wages directly on to your card.

Purchasing Protection

Like traditional credit cards, you enjoy full purchasing protection with Visa and Mastercard in the event of supplier default or fraud.

Payment Of Pension Annuities

If an annuity is being paid as a result of a pension scheme, personal pension or self-employed retirement annuity contract, it cannot be accorded purchased life annuity treatment and is taxable in full.

Pension annuities are taxed under the provisions of the Income Tax (Earnings and Pensions) Act 2003. The pension provider has to operate pay as you earn (PAYE) which effectively deducts income tax at the appropriate rate through a system of code numbers.

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