Checking out your credit report is a very important step before applying for any sort of credit or finance – understanding how your financial circumstances currently stand and are viewed by prospective lenders will give you a good indication whether you are likely to be accepted for that loan or – if your credit score is poor – if you may be doing yourself more harm than good by applying.
So why are they so tricky to comprehend? Well worry no more – as this article will attempt to help you make sense of your credit report and get you well on your way to credit score comprehension.
Public Information
This section details whether you have any CCJ’s (county court judgements), bankruptcies or insolvencies against your name. It shouldn’t be a surprise to you if you do have any of the above – but the presence of any of these can negatively affect your credit score.
CIFAS
CIFAS is a leading UK fraud detection agency and help to detect identify fraud. This section of your credit report doesn’t actually impact your credit rating – but does serve to identify you if there is any suspicious activity going on related to your address, and as such, whether you may be at risk of identify fraud.
Short Term Loans
This section highlights whether you have any open or closed accounts with short term lenders. As with any loan, the use of short term loans could negatively impact your credit score if repayments are not met.
Financial Connections
Highlights any people with whom you have a financial connection. For instance, if you and your partner have a current account in joint names then that is a financial connection, and if your partners credit score is poor then that can impact your own score. If there are outdated financial connections here, then you can request for these to be removed.
Electoral Roll
This section shows whether you are registered on the electoral roll, the address at which you are registered and the date since you were registered. Lenders like to see borrowers on the electoral roll as it confirms that you are who you say you are and you live where you say you live and therefore protects them scammers trying to commit fraud or steal an identity.
Search History
Shows a list of all credit searches made against your name. There are two types of searches hard searches and soft searches. Hard searches can be seen on your report by anyone who has access to search credit files. Soft searches can only be seen by you. Too many hard searches within a short space of time can negatively impact your credit score.
Notices of Correction
If you choose to, you can add notes to your credit file to try and explain any abnormalities – these are called notices of correction. They won’t result in the abnormality being removed, by can help to provide and explain any extenuating circumstances.
Address Links
Provides a list of previous addresses that have you have been associated with. Normally, this is just a list of you past addresses. Lenders typically like to see long, unbroken stays at each address as this suggests a level of stability. A large list of addresses with very short stays at each might indicate that there were financial issues that caused you to be unable to stay at a single place of residence for any extended period of time.
Financial Account Information
Provides a list of all your recent financial accounts, both those that are still open and also those that have now been closed. This list will include bank accounts, credit cards, phone bills, utility bills, mortgages and more. Lenders look at this to understand your current level of debts and whether you are keeping up repayments on all of the credit you have taken out. If you have a number of accounts that are marked as having money owed, then this could cause your credit score to be negatively affected.
Hopefully this list has helped to explain some of the sections you see on your credit report and taken the mystery out of the credit score somewhat.