Here’s a useful tip in Credit Education Month – if you’re planning to buy on finance from a retailer, how about getting sight of your credit report before you take the plunge?
Stores that offer finance payment schemes, including soak.com, are obliged to run a check to make sure you are good for the credit being offered. In short, they want to know how likely you are to make the repayments.
Lenders use three credit reference agencies – Experian, Equifax and CallCredit. So what sort of information do these three agencies hold? Your personal details obviously, including your current and previous addresses, whether you’re on the electoral roll, financial links to other people, the credit accounts you have, any missed payments or defaults and a list of recent searches on your file.
Experian is the largest of the three agencies and the only way to see your Experian report for free is to sign up for its 30-day free trial. But if you forget to cancel your subscription it starts to cost you £14.99 a month.
Equifax offers a very similar free 30-day free trial to view your credit report – and Equifax’s files can also be accessed free via another company called Clearscore, but the downside is that you will be offered “matched” credit cards and loans.
Callcredit, the UK’s newest credit reference agency, isn’t as well used by lenders as the other two, but does provide free-for-life monthly reports through its Noddle service, which, as with the Clearscore Equifax free model, tries to sell you credit cards and loans – though you aren’t obliged to bite.
If you can’t be fussed with seeking a free way into the three credit reference agency’s files, it’s worth knowing that you actually have a legal right to request a report from any of them – and it only costs £2. All three credit reference agencies will provide you with a “statutory” report
Whichever access method you opt for, seeing your credit rating the way potential lenders do can be an eye-opener. Small mistakes can create problems for you, and your file will tell you if, for example, addresses on old accounts are out of date and might highlight detrimental financial links with an ex-partner.
So correct any inaccuracies – and you’ll also see it’s a good idea to cancel any unused credit or store cards, as these can reduce your overall credit score.
Armed with this information, you can approach a responsible retailer with the confidence that you are likely to be offered finance. The trick then is to make sure you don’t default on your payments as this could incur additional interest.