No one has a right to be awarded credit. Most lenders will
decide whether or not
to lend someone money by credit scoring. This means awarding
points based on the information that you supply in your
application. The lender is basically deciding whether it
is an acceptable risk to lend money to you. If you do not
meet the required number of points then you might be refused
credit, or you could be charged a higher APR. There are
ways in which you can improve your credit rating.
Most lenders check information held by a Credit Reference
Agency. These agencies keep information about how good (or
bad) people are at handling money. This is known as a credit
file and includes:
- address and electoral roll information. You will get more
points if you have not moved address much and have been on the
electoral roll at each address that you supply.
- court orders for not paying debts. These are usually
County Court Judgements and stay on file for 6 years.
- past credit history, showing details of how credit has been
managed, whether good or bad. If you have defaulted on any
previous credit agreements then this will also be held on file for
6 years.
- details of recent credit applications.
- details of any bankruptcies.
Everybody has a right to see the information in their credit
file. If you have been refused credit, or if you are just
curious to see what is being held on your file then contact
Experian, Equifax or Callcredit. You can
now access your report online but you may have to pay a small
amount. These websites are also a good source of reference if you
want to find out more about how credit works.
Correcting your credit file
If you do not agree with any of the information on your file
then you can ask for it to be corrected by writing to the credit
reference agencies, providing evidence if possible, and asking for
the incorrect information to be removed. It is also possible
to ask for a Notice of Correction to be put on your file which
allows you to explain individual entries on your report.
Credit Repair Companies who offer to clean up your file for a
fee should be avoided. Any changes that need to be made to
your file can be done by yourself, and if you need help you should
contact the Student Advisers, your
local
CAB or National
Debtline.
Responsible use of credit
The system of credit scoring and the use of credit reference
agencies by most lenders in the UK means that if you have a poor
history of using credit then this can make it very hard for you to
borrow money in the future. This may not be a big problem for
you in the short term, but could have serious consequences later in
your life when you want to take out a mortgage or loan to buy a
car, for example. It is very important to use credit sensibly
so that you don't create obstacles to being where you want to
be later in life.
"The Smart Money initiative at the University of
Westminster is part of a national project aiming to improve
students' financial capability, led by the the Consumer
Financial Education Body (CFEB)"