Checking Your Credit Report and Correcting Information

A man checks his credit report on his tablet

The 2021 Credit Score Guide – Chapter Five

Would you believe that 15 million Britons have never requested a copy of their credit report? Many only do so when there’s a problem – for instance if they find themselves turned down for a credit agreement or loan and wonder why. This article highlights the importance of checking and correcting your credit report to improve your credit score and all-round financial health.

A young couple are checking their credit report before making new substantial financial commitments

Article Highlights:

In this article, we explain the importance of regularly checking your credit file and explain how this can be done. We also tell you what you should do if you find errors which might have a direct effect on the credit rating you’re given. Finally, what’s a Notice of Correction and a Notice of Disassociation and under what circumstances would you need to add one of these to your credit file?

Why should you check your credit file?

It’s absolutely crucial that you check your credit report regularly. Financial agreements you don’t know about can often be the first indication that you’ve become a victim of identity theft. The sooner you realise, the easier it is to get the problem rectified and the less damage done.

Financial agreements you don’t know about can often be the first indication that you’ve become a victim of identity theft.

Another reason why checking your credit report is a good idea is that you can check for mistakes. No organisation is infallible and clerical errors are sometimes made. It could be someone with the same name as you that leads to doubts over your creditworthiness. Or maybe you’ve been in dispute with a creditor about a payment. If left on your file, it can give lenders a mistaken image of what type of borrower you are and your reliability.

Repair your credit score & boost your chances for credit - Family money

When should you check your credit report?

Checking your credit report is vital before applying for new lines of credit and is imperative before a substantial financial commitment such as a mortgage or a business loan. If you’re turned down because of fraudulent credit applications or because of errors, it can be extremely damaging for you. You might have to put your personal and professional plans on hold until the matter’s sorted out.

Having to re-apply can also have a domino effect on your credit rating. Too many searches on your credit report can make your credit score even worse as lenders get their impression that you’re desperate for money. This can count against you and lead to further rejections for credit. Been rejected for an online loan and don’t know why? Read our 4 reasons your loan application was declined.

What to do about errors on your credit report

Credit reference agencies aren’t always to blame if there are mistakes on file about your credit history. This could be a question of mistaken identity. If it’s someone with the same name as you, this is a relatively easy matter to investigate and modify.

However, if the information comes from a bank or building society with whom you do have a financial relationship, the credit reference agency isn’t permitted to alter the information until they’ve checked with the lender. Instead they will put a ‘Notice of Dispute’ on the entry until they’ve contacted the organisation which supplied the information. It’s very important that you’re able to give proof of why the entry is wrong such as supplying a copy of a receipt or a bank statement. Corrections are then made within 28 days.

A young woman on the phone with a lender who refuses to modify mistakes on her credit history

If lenders refuse to remove or modify mistakes, you can ask the ICO (Information Commissioner’s Office) to intervene. Only the FOS (Financial Ombudsman Service) has the power to award compensation for mistaken entries on your credit report which have financial consequences for you.

When to use a ‘Notice of Correction’

Sometimes there may be an entry on your credit file which you feel is misleading although it isn’t inaccurate. Perhaps there were extenuating circumstances for a late payment or you went through a period of financial difficulties because of ill health or redundancy.

In this case, you can add a ‘Notice of Correction’ to your file. (You can find out what this is here). In this document (of up to 200 words), you give factual information to explain the circumstances behind the entry. The key word is ‘factual’. If your account is considered to be defamatory (of a third party), frivolous or unsuitable, your account might be rejected. Some debt advisory agencies recommend that you avoid adding these notices. They argue that they can draw attention to missed payments or defaults and can be seen as excuses rather than justifications.

Too many searches on your credit report can worsen your credit score

Although organisations must read notices of correction, they’re under no obligation to take your explanation into account before reaching a decision about whether to give you credit.

When to use a ‘Notice of Disassociation’

If you take out a financial product with someone else such as a joint bank account or a mortgage, then your credit reports become linked as ‘financial associates’. This is often the case when you share a house with someone and/or you’re in a relationship.

If you subsequently move or separate, it’s very important that you check your credit file and complete a Notice of Disassociation. (You can read more about NODs here). In order to do so, you must prove that your finances are no longer linked in any way. For example, shared bank accounts have been closed. This is especially important if your former partner/housemate have a poor credit rating. If lenders are under the mistaken impression that your finances are still linked, you could be turned down for credit through no fault of your own.

Concluding words about checking your credit report

You should make a habit of checking your credit files at all the main credit reference agencies around twice a year. In this way, you’ll be able to nip problems in the bud before they affect your access to credit and how much borrowing costs you. You should definitely check your reports before applying for any new lines of credit. Although direct lender loans for bad credit exist, they are far more expensive than loans for people with fairer credit.

FAQs about credit reports

What is a credit report?

A credit report is put together by companies that are known as credit reference agencies. There are 3 such agencies that operate in Britain. There are: Experian, Equifax, and TransUnion. Their purpose is to collect information about your credit history and use this to compile a credit report, from which a credit score is derived.

Does a credit check show bank accounts?

Credit reports do not list or show your bank account balances or assets. Therefore, these numbers do not impact your credit score. Credit reports are mostly focused on your credit history. If there is a balance that you owe to the bank and this is turned over to a debt collection agency, for instance, then that information will then appear on your credit report.

What do landlords look for in a credit check?

Landlords check credit reports of potential tenants for any evidence of prior evictions, your debt loan or significant credit events in your credit history. The purpose of these checks related to the ability of landlord to ascertain whether you will be able to meet your monthly responsibilities as a tenant.

Enjoyed this article? Continue to Chapter 6