Experts predict that the coronavirus pandemic will kickstart a deep recession, worse than the one experienced in 2008. People with a bad credit score already pay more for credit, but during a recession, many will not be able to access credit at all unless they improve their credit scores drastically! This guide is designed to help you prepare your credit score so that you have as many credit options available as possible once the recession hits.
In this guide about credit scores and credit reference agencies (CRAs), we’ll help you to understand your credit score, how it works, why it is essential, and – most importantly – how to improve it before it’s too late! You can click through to the chapter you want using the table of contents below:
|Chapter 1||The Three UK Credit Reference Agencies You Need to Know About|
|Chapter 2||Understanding Your Credit Score, Credit Rating And Credit History|
|Chapter 3||What Information do Credit Reference Agencies Hold About You?|
|Chapter 4||Credit Reference Agencies and Their Regulation|
|Chapter 5||Checking Your Credit Report and Correcting Information|
|Chapter 6||Identity Theft and The Safety Of Your Personal Data|
|Chapter 7||How Does Your Credit Score Affect All Aspects Of Your Life?|
|Chapter 8||15 Easy Ways to Improve Your Credit Score in 2022|
|Chapter 9||Common Myths About Credit Reference Agencies And Your Score|
|Chapter 10||What Steps To Take If You’ve Been Refused Financial Products|
Wondering what you’ll find in each chapter? Here’s a full breakdown of our 2022 guide to improving your credit score before a recession:
Credit score guide basics: What we’ll cover
Understanding how credit in the UK works is an important first step to understanding your credit score. Chapter 1 is an overview of how credit reference agencies (also known as CRAs) operate, concentrating on the UK’s three largest: Experian, Equifax and TransUnion (previously known as CallCredit). We begin by imagining what life would be like without them and examine the role that they play in greater depth. We answer questions about how similar the information they hold is and how much power they have. Who really decides whether a consumer is offered or refused credit?
Chapter 9 is also an overview of credit reference agencies and credit scores but is devoted to dispelling some of the common myths about them. Why not read it and see how much you really know about them?
All about credit scores/ratings/reports
Chapter 1 also attempts to answer the question about what a good credit score is. Although ‘credit score’ and ‘credit rating’ are often used interchangeably by both consumers and the media, they aren’t synonyms. In Chapter 2 we explain the difference between them before listing what information lenders concentrate on when they access your credit report.
Some people are very distrustful about the idea that credit reference agencies hold data about them. Some of their suspicions come from the fact that they don’t know what information a credit report holds. In Chapter 3 we set the record straight by listing what information is – and isn’t – in your credit file. We also explain how long the information in your credit history remains on your report and what time-frame lenders are most interested in.
Many Britons are aware that a poor credit score could be the reason why they’re turned down for credit. However, your credit score has much wider-reaching effects. It can quite literally affect every aspect of your life. A poor credit rating can end up costing you money on everything from utility bills to insurance. Also, it can even have an impact on your personal and professional goals. Read Chapter 7 to find out how.
If you do have a low credit rating, don’t despair. Chapter 8 is a must-read since we give some guidelines about how to improve your credit score – even after a CCJ or bankruptcy. All that is required is persistence and time. We also say whether it’s worth paying money to a credit repair agency.
Learn about the regulation of CRAs
Another reason for consumers to be suspicious of credit reference agencies (CRAs) is that they fear that they might use the data they hold about us to make money. Are credit agencies allowed to use their credit referencing data for purposes of direct marketing?
Chapter 4 looks at the regulation and supervision of credit reference agencies and the roles played by both the FCA and the ICO. We also explain how the work of credit reference agencies comes under the Data Protection Act of 1998 and how the GDPR has changed the sector since May 2018.
Learn how to access, check and correct errors on your credit file
Easy access to your credit file is one of the cornerstones of UK and European data legislation and in Chapter 4 we tell you how to receive a copy.
Easy access to your credit file is one of the cornerstones of UK and European data legislation.
We expand on this issue in Chapter 5 by giving reasons about why it’s a good idea to regularly check your credit report and how often it should be done. We also tell you how to correct any errors you may find. We explain what a Notice of Correction and a Notice of Disassociation are and when you should add them to your credit report.
About identity theft and the safety of your financial data
In Chapter 6 we turn our attention to the issue of security and explain the role that credit reference agencies can play in the fight against identity theft. Although everyone has heard of credit scoring, have you ever heard of fraud scoring? We explain what National Hunter is and what steps you can take if you have been a victim of identity theft.
As well as our own vulnerability to identity theft, we also consider how safe the data held by credit reference agencies is. Considering security breaches at both Experian and Equifax in the recent past, we ask: what are they doing to protect our data?
Advice if you’ve been refused a financial product?
If you’ve been turned down for a financial product, Chapter 10 gives you advice about what to do next. We give you a list of do’s and don’ts so that it won’t happen to you again. If you want a more in-depth article on loan decline reasons, you can read our dedicated article on what to do if you’ve been refused for a loan. Of course, we strongly suggest that you try to improve your credit before you apply for bad credit loans from a direct lender or for loans with no guarantor as these are a very expensive form of credit.