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Your credit report becomes active when you are 18 years old and holds vital information that would determine your eligibility for financial products such as credit cards, loans and mortgages.

A credit record is accessed by banks and lenders when a customer makes a loan, credit or finance-based application and confirms details such as age, address, outstanding debt and repayment history. Government bodies may also access this credit data to check that individuals are entitled to certain benefits and to recover unpaid taxes and similar debts.

Your credit data is stored by the three main credit reference agencies in the UK: Callcredit, Experian and Equifax. An individual's credit information is updated in real-time, as the credit reference agencies will receive live updates from other lenders and providers to record whether an individual’s credit payments have been paid on time or defaulted. This information needs to be updated automatically so potential lenders and providers can effectively assess a person's financial record.

How a credit score works

Every individual in the UK has a credit score when they turn 18, which is used to measure a person's creditworthiness and is a simple numerical way for lenders to score who they wish to approve and decline.

Credit ratings can fluctuate based on payment performance whereby keeping up with credit card and loan repayments will maintain a high score, but failing to make payments will elicit a lower credit score. A credit score can always be improved by building up a history of regular repayments made on time.

Why is maintaining a good credit score important?

  • Improves chances of acceptance for loans and credit cards
  • Improves chances of accessing the best rates for loans, credit cards and utilities
  • Is necessary to obtain a mortgage
  • Provides financial freedom
  • Suggests you have not been a victim of fraud

How do I get my credit reference file?

You have the right to write to any of the credit reference agencies and ask for a copy of your credit reference file for a fee of £2. Your letter should include:

  • your full name;
  • any other names you have used or been known by in the last six years eg your maiden name;
  • your full address including postcode;
  • any other addresses you have lived at in the last six years;
  • your date of birth; and
  • a cheque or postal order for £2 made payable to the credit reference agency.

Information extracted from Guarantor Loan Comparison.