Your credit rating can affect everything from mortgage applications, to mobile phone contracts. Put together by credit reference agencies, lenders look at your credit history to check your past and present borrowing behaviour. This then helps them to decide how risky it is to give you credit.
Download our factsheet PDF (106KB) for more useful information on how credit works.
They’re independent organisations that hold information about you to help banks, building societies and credit companies, decide whether you’re likely to pay the money back.
Everyone who has or applies for credit in the UK has a credit rating and there are three main credit reference agencies:
We report your financial activity to credit reference agencies once a month, which we have to do as part of our regulatory requirements. Other businesses have to do the same, including utility, mortgage and loan companies.
We can only update your information with the agencies once a month. How current your rating is depends on your statement date and when you pay your bill, as well as when we and the credit reference agencies update our records. This means it can take between four and eight weeks for your file to be updated. Here’s how the process works:
1. We collate your credit information on the last day of every month, based on your statement history for that month
2. We send your file to credit reference agencies the 15th of the following month. (Other companies send their data on different dates)
3. The credit reference agencies process your information and update your report. They have to update it from all financial companies, so how quick your file updates varies by several days.
4. In total, it can take up to two months for your information to be collated and for your file to be updated
Before a lender decides whether to give you credit, they’ll look at a range of information in your credit file. The most obvious is any credit you’ve had or have in your name during the last six years. This includes credit cards, loans, mortgages, current bank accounts and utility and mobile phone contracts. Other criteria they’ll look at includes the length of your credit history and how many times you’ve applied for credit within short time periods. Plus, information that’s publicly available will also be considered, for example County Court Judgments (CCJs) and the electoral register.
We have to report your financial activity to credit reference agencies once a month and this information can stay on your file for up to six years. So, if you miss or make a reduced payment, this will be reflected in your credit history. Any default information – for example if you become bankrupt, insolvent or you’re on a repayment plan – will also be recorded.
Think your credit rating’s only checked for things like mortgage and credit card applications? Think again. Lenders check credit reference agencies for:
Mortgages and re-mortgages
Mobile phone contracts
Home and car insurance
Potential employers may also check your credit rating before offering you a job
There are a number of factors that can give you a poor credit rating, including:
Need to up your credit score? The best way to improve your rating is to stay on top of your finances. This means making your payments on time and never going over your credit limit. To help you improve your rating, try to tick off the following tips:
For more help on how to keep your account in order, take a look at our how to stay on top of your finances guide.
Find out how you can get free, ongoing access to your Experian Credit Score with your Barclaycard. You can also apply for your credit report with Experian , CallCredit or Equifax though there may be a charge.