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.