What is a credit report?

A credit report is a record used by banks, service providers, lenders and other companies to decide how reliable you are. It plays a big part in determining which financial products you get, and the terms that go with them. So it’s really worth knowing how they work.

Man and woman on laptop

So, what is a credit report?

A credit report, quite simply, is a detailed summary of your credit history. It’s put together by a credit reference agency and contains personal details such as your current and previous addresses, and employment history. It also lists any financial connections you may have with other people, for instance, someone you share a joint account with.

This information is collected and stored by credit reference agencies, and is used to determine your credit score. It contains personal details, like your current and previous addresses, national security number and employment history. The report also lists any financial connections you may have with other people, for instance, someone you share a joint account with.

Most importantly, it clearly shows how you’ve managed repayments in the past - how much you borrowed, who you borrowed it from, and if you repaid it in full and on time.

A credit report is important because it’s used by lenders to help determine whether you’d be a reliable borrower – and whether to offer the credit you’re after, be it a particular card, type of loan, or mortgage for instance.

It can be checked by others too, like a potential landlord if you’re looking to rent a property (you must provide permission for the landlord to do so, usually in writing). It may also be reviewed for insurance purposes, or by utilities providers – even when you’re setting up a new phone contract.

For all these reasons, it’s a good idea to check your credit report regularly to make sure the information it contains is correct and complete.

Why check your credit report?

Ideally, you should check your credit report at least once a year, although you’re free to do it whenever you like. That way, you’ll spot any mistakes that could potentially reduce your credit score, or affect your ability to get credit in the future. If there’s an error, the credit reference agency which compiled the report will need to correct it.

It will also allow you to spot any identify theft and fraud, such as fraudulent credit applications that have been made in your name.

There are three main credit reference agencies in the UK - Experian, Equifax and TransUnion (formerly Callcredit) – while each uses a slightly different scoring system to record your credit score, ultimately, the higher your score, the higher your chances of getting the best credit deals. For you, that could mean lower interest rates, fewer fees and better terms and conditions on any credit cards, loans or mortgages you take out.

What’s included on a credit report?

Some of the information in your credit report will be drawn from banks, building societies and credit card companies you may have borrowed from in the past, or that you currently owe money to. Other information on your file may come from public sources, like the electoral register, or supplied by the utility providers you use.

Things you’ll find:

  • personal details, including your name, address and date of birth
  • your current employer
  • credit or loan account information – specifically, how much you currently owe lenders
  • any late payments on existing or past accounts
  • any missed payments on existing or past accounts
  • any court judgments made against you
  • whether you’ve ever been declared bankrupt
  • whether your home has ever been repossessed, or you’ve moved away owing money
  • any searches or enquiries carried out on your accounts in the past.

And things you won’t:

  • any current or savings account information
  • your salary
  • any student loans you may have
  • criminal record
  • your medical history
  • any driving or parking fines
  • any council tax arrears
  • your gender or ethnicity.

What to do if you spot a mistake

If you’re checking your report and do spot an error, it’s important to get it corrected. Such mistakes can range from something as simple as a misspelt address to incorrect information supplied by a lender, which could put others off in the future.

To correct a mistake, you can contact the company that supplied the information, or get in touch with the credit reference agency itself. Then, the agency has 28 days to let you know if they’ve removed the entry, amended it, or taken no action.

During that time, the entry will be marked as 'disputed' so any potential lender searching your file will know not to rely on it. If the credit reference agency doesn't amend your records, you can add a ‘notice of correction’ to your report – to explain why you think that particular piece of information is wrong.

Some things to remember

Can you check your credit report too often? Can your score be affected by someone you live with? Those are some of the questions often asked, so here are a few answers:

One score doesn’t fit all

A credit score is a three-digit number that’s calculated by applying a mathematical algorithm to the information in one of your three credit reports held by Experian, Equifax and TransUnion. Because all lenders don’t always report the most current information to each bureau, the same scoring model using the data from one credit bureau could deliver a different score when using data from another credit agency.

Credit reference agencies don’t approve or deny applications

Credit reference agencies simply supply information to lenders – and it’s the lenders who use this data, along with any other information they may have already, to determine whether an application is successful or not.

Checking your report isn’t a problem

Checking your credit report often won’t damage your credit score. In fact, it’s a smart thing to do before applying for a credit card or mortgage – and a way to spot any mistakes on your record should there be any.

Your credit score is yours alone

Unless you’re financially connected to someone – through a joint mortgage for instance – your score won't be affected by the credit history of anyone you live with.

What’s next?

As you see, a credit report – and credit score – can touch your life in many ways. So it should be good to know that checking it is free and only takes a few steps.

Find out how to check your credit score