It's a good idea to keep on top of your credit rating

Credit records are held by credit reference agencies, the main ones being Experian, Equifax and Callcredit. When you apply for credit, which could be anything from a credit card, mobile phone contract or hire purchase agreement to a mortgage, the company you are applying to can check your credit history with one of these agencies. Similarly, it will submit to the agencies details of any credit agreements that you have entered into, and notices of late payments, unauthorised overdrafts and court judgments against you if you default. Looking at your record will help the bank or other financial company you are applying to for credit to see whether it wants you for a customer and, in some cases, such as personal loan where interest rates may be tailored to your credit rating, to decide what rate it will charge you.

Credit reference agencies simply record the facts about your credit history. They don’t make judgments - that’s for the company issuing the credit to do. Having a good credit record usually goes in your favour - you are demonstrating that you are a reliable customer. But it can also go against you. Some companies specialise in “adverse credit” and welcome customers who have a poor credit history because they can charge them a higher rate and make more money out of them. It is possible to be turned down for credit because you are “too good”.

If you have never borrowed - perhaps your partner has always paid all the bills - you may have no credit record at all, and even though your family has never had debts, you yourself may find it hard to get credit in your own name simply because, as far as the credit issuer is concerned, you are an unknown quantity.

While credit records are supposed to be simple statements of fact, errors do occur, which is why it is important to check your record regularly. The agencies offer a range of services, such as free introductory subscriptions and permanent online access in return for a monthly fee, and you may find these attractive. The simplest way to get a copy of your record, however, is to apply for what is known as a “statutory report”, the type of record that the companies are obliged by law to supply to every person whose record is on file who asks for it.

You do this by sending a small fee (make sure you check for the latest cost of that fee) to the three agencies at the following addresses.

Equifax plc
Credit File Advice Centre
P.O. Box 1140
Bradford
BD1 5US.

You can also order your credit report online at http://www.equifax.co.uk/Products/credit/statutory-report.html

Experian Ltd
Consumer Help Service
PO Box 8000
Nottingham NG80 7WF.

You can also order a report online at http://www.experian.co.uk/consumer/statutory-report.html or phone 0844 481 8000.

There is a surcharge for credit report orders made by phone.

Callcredit Ltd
Consumer Services Team
PO Box 491
Leeds LS3 1WZ.

You can also order your report online at http://www.callcredit.co.uk/stat-report-online/

You might also like to investigate a new online service called Noddle https://www.noddle.co.uk/, from Callcredit. It offers you your credit report free online, and in return suggests credit cards and other products that interest you based on your credit score.

You need to apply to all three credit reference agencies, because different financial companies use different agencies and it is possible for an error to occur in one that does not show up in the others.

While it is to be hoped that errors are kept to a minimum, there are numerous reasons that mistakes can creep in. Perhaps the most alarming is that there has been fraud on your account, but there could also be a simple blunder such as mixing your account up with someone else’s.

Companies may also be slow to record rectification of your details where things have gone wrong. For instance, if you have defaulted on a loan but since made full payment, the fact that the outstanding debt has been settled may fail to appear. Whatever the reason, you need to know about errors and get them put right.

Your first task is to check whether your record is in order and see if you need to take further action. Look out for more information in future on the Saga website about how to correct errors in your credit record, how to disassociate yourself from someone you were formerly linked with financially, such as a former spouse, whose poor credit history may be damaging your own record, and how to improve your credit record if yours is poor but it’s your own fault.

* Here Annie Shaw shows you how you can improve your credit rating. 

* Read Annie Shaw's money articles every month in Saga Magazine.