Credit Report FAQ
Getting credit or being declined
- The credit reference agency will not make the decision about your credit rating,
although they may provide guidelines and scores which can help lenders to make decisions.
But ultimately the company to whom you have applied for the finance will arrive at a
credit rating decision based on their own internal scoring systems.
- You cannot demand credit. It is a service which the lender can choose whether to
provide. Most lenders will look at your credit records before making a decision. If you
are declined credit the lender is not required to explain exactly how they arrived at the
decision, but they are required to co-operate and give you an idea and tell you if they
looked at your credit report with a credit reference agency. If they have looked at your
credit report, then they must tell you the name and contact details of the credit
reference agency that they used. You then have the right to write to the credit reference
agency directly, and ask them for a copy of your credit report, or you may be able to see
your credit report online.
- You cannot ask the credit reference agency why you were declined credit - the agency
cannot tell you that, they can only provide the information without comment. You can then
look at your files and see if there are any factual errors which need correcting. If your
credit record is weak or has problems, but the information is factually correct, then you
cannot remove it from your files. You can, under some circumstances, make a comment which
is recorded on your file, for example to explain the circumstances for a missed payment or
any other adverse information.
- Do not make repeated applications for credit once you have been declined. Each
application you make is likely to result in a search of your credit report. These searches
are registered for 12 months and could affect future applications. Find out from the
lender why your application was declined before making further applications.
- Remember that lenders decisions are based not just on risk, but profit. They look at
whether the applicant matches their profile of a potentially profitable customer. Credit
agency information also helps lenders choose profitable borrowers; each lender may be
looking for different characteristics. Some may prefer borrowers who only repay the
minimum amount on a credit card each month and look likely to maintain a high credit
balance attracting a large amount of annual interest. If you are declined credit, it may
be because the lender does not see you as a potentially profitable customer.
If you’ve never had any credit or loans, you may think you will automatically get a
good credit score and that with no other credit or debt you would be a highly attractive
proposition to lenders. However, lenders often prefer to give credit to people where their
credit report shows some track record and experience at handling credit. Rather than no
credit at all, lenders like to see a history of making repayments on time and in full. If
you’ve never had a credit arrangement then they have no real way to know how you may
handle it in the future. Some lenders may even reject applications on this basis. In this
position you may need to start by applying for very small, low risk amounts of credit
which a lender will consider an acceptable risk even without any credit history on your
credit report. After building up a credit history showing you have repaid consistently and
never missed any payment, your credit report will appear more positive to lenders in the
future.
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