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The magic world of the credit reference agencies (and what they don't tell you)


Staff member
We all know about the credit reference agencies but who are they and how do they work.
Lets start by telling you that the credit scoring system isn't run by just one company. There are several commercial companies who collect data about you from the local councils to see how you have paid for your council tax, courts to see if you've had difficulties paying off creditors. They check the electoral roll and they invite information from other creditors who you might have credit with and all of this add to a scoring system that helps lenders decide if you are credit worthy.
The giants in the credit industry are Experian, Equifax and Call Credit.
Because they all use different systems it's not going to be possible for me to explain how the credit score is worked out, however this is irrelevant because most creditors will take on board your overall score from at least two of the three credit reference agents.

A word of warning
I've learned about companies who advertise that they can fix your credit rating no matter how bad it is. This magic solution is fantasy. You'll be wasting your money and in some cases these dubious companies have falsified records to boost your ratings... This is a criminal offence and will land YOU in trouble.

Everyone has a right to know what ratings they have, who has given them a bad rate and why. You also have the right under the data protection act 1998 to have a full report sent to you. Normally there is a charge of £1 to cover administration fees. If you believe that a company has given wrong information that has affected your credit score, you have the right to demand that the information is either struck from your records or corrected. As this is your legal right the credit agencies cannot charge you for this work. Further more you should demand that this is completed within 14 days and that proof is provided at thier cost showing the corrections.

Associated debt
Not a lot of people are aware of associated debt. This can be, for example a husband and wife who had a joint bank account. Years later the separate or divorce but the credit reference agencies will still show an association with your ex partner. It doesn't take too much imagination to see that this might affect your credit ratings.
To resolve this you must write to each of the credit reference agencies and expalin that you are no longer associated with that person any longer. You should then request that they remove any reference to you and them from your records. Normally I would demand this to be complete within 14 days and proof sent to show that this has been done.

So what effects my rating then
Well lots of things. You'll get scored badly for the following things:
Late payments
Missed Payments
Defaults (failed to pay the agreed monthly payment)
Poll Tax payment failures
Utility bills late or none payment
Not having a permanent address
Living in a property associated with debt
Not having a job
Having a name change (excludes marriage)
Never having borrowed money before

So how do I build my credit points up
Well probably the best way to do this is with a monthly cycle. Fore instance, a mobile phone contract paid by direct debit will attract points to your score if it is paid on time. Credit cards do just the same as long as it is paid on time each month. I would recommend spending small amounts on the credit card and paying off the balance each month. HP on a car will help, but don't just go out and buy a car just to get the credit score up.

I'll add more to this topic as time goes on. But for now here's some contact details for the three credit reference agencies.

Experian: 0844 481 8000 or www.experian.co.uk
Equifax: 0870 010 0583 or www.equifax.co.uk
Callcredit: 0870 060 1414 or www.callcredit.co.uk


Major Contributor
Some years ago, I was informed that enquiries themselves carry bad credit points; so if you apply for more than one account with a number of firms, that adds to the problem; the fact of lots of queries were recorded and seen as a 'red light'; is that still true?


Staff member
Yes treeve that is still the case. Thanks for highlighting this.
If you shop around for a loan or anything that requires a credit check a credit search is placed on your credit account. If too many searches are recorded it will have a negative effect on your rating. The long and short of it all is not to give your details across if you are only making a general enquiry for a loan. It's also the case if you hop from bank account to bank account. Each time you open a bank account a credit search is made about you even if you don't want credit.
Well done treeve!!


Staff member
Credit, credit, credit!
Imaging Andrews surprise when he received a letter today offering him £500 as a personal loan.The letter goes on to say the the money is yours and there is nothing else to do other than fill in your bank details and sign the agreement.
What's wrong with that I hear you ask yourself?
Nothing... except that he's 14 years of age!
So where did they get hold of his details..... and is it responsible to lend money without doing any checks whatsoever?
Looking through the small print of the "Provident Credit" agreement can you guess what the APR is.... no!
Well it is set at 272.2%APR is that within the law?


Active Member
I won't go into detail (small town syndrome) but having the same name and initial as someone else in a similar postcode area will flag up all sorts of poor credit rating anomolies as well.::14: