How credit file errors can have devastating effects
Each year up to one million people are being refused access to credit through absolutely no fault of their own. The fault in actual fact lies with errors hidden within Credit Reference Files as a result of poor reporting by previous suppliers. There are so many different routes to credit that at any one time our Credit Reference Files may include multiple entries. In addition to multiple entries there are also numerous different agencies with whom credit suppliers will report to. The overall effect of this is that should an error appear in any one of the files with any one of the agencies at some time or another, the damage to your creditworthiness may be long standing. In recent times the Money Mail has reported on numerous different stories which centre around the fact that credit reporting errors have costed individuals the ability to obtain not only credit cards and even mobile phone contracts but also mortgages and as such dream homes have been lost; certainly not a matter to be ignored.
The three main Credit Reference Agencies in operation are Experian, Equifax & CallCredit and each will hold information concerning your past and present credit based activities. This means a record is held on your repayment history as well as details concerning amounts borrowed and repaid. Where repayments have been missed or were late the agencies will report as such; based on the information given by the supplier. This therefore means a record is available for view which will contain information for such accounts as Hire Purchase agreements, energy suppliers and even mobile phone contracts. Recently a former contestant on the popular BBC 1 show, Strictly Come Dancing, made it public knowledge that her purchase of a new property almost fell through as a direct result of a discrepancy in her Credit Reference File for a previously used Energy Supplier. The difficulty for consumers who are unlucky enough to experience these errors through absolute no wrong doing on their part, is the fact that such errors are not always noticed. Collectively consumers are becoming better at monitoring their Credit Reference File and what ‘score’ they are maintaining but it is still an overlooked resource for many. Often it is only in cases where credit has been rejected that consumers then investigate what the underlying problem is.
Today there are actually a number of different services available to us to review and learn about what our Credit Reference File says about us. One such resource is Noddle who supply the ability to review your current as well as past credit via the means of a free monthly report. Noddle also provides a scoring system based on a scale of 1 – 5 which can quickly indicate whether your credit performance is deemed as poor, good or excellent. Noddle also provides an in-depth history as to your current and previous performance for accounts which are either open or closed and as such will likely provide the information as to where a ‘black’ mark has been made should there be one. Many consumers are under the belief that checking your Credit Reference File on a regular basis in itself has a detrimental effect on your overall credit score and this is simply completely false. Individuals can access and review their credit files as often as they wish without a negative reflection being inputted on their file. A recent survey by the BBC found that as many as 1 in 5 people in the UK were fearful of checking their report for this very reason.
It is clear from up to date reports that consumers are increasingly unhappy with the information being contained on their Credit Reference Files as indicated by the increase in complaints made to the Financial Ombudsman Service in the last 9 month period. To date this figure is at 226 compared to 189 in the entirety of 2014. The route of the problem seems to lie with the fact that nowadays a broader spectrum of companies are making entries to the available Credit Reference Agencies. Whereas in the past it was typically only the main stream credit suppliers who made credit reference entries whether good or bad, in today’s reports, there are the addition of mobile phone suppliers, broadband giants and energy suppliers. Although the sums of money being repaid to these such companies on a monthly basis are often small, the missing of a repayment or the poor reporting of a payment can lead to larger and more main stream credit suppliers rejecting applications as a result of this. Ensuring continued and thorough reviews of your Credit Reference File information will help to ensure mistakes are found and disputed in a timely manner and may ultimately mean the difference between a dream home, or not.
Representative Example: Representative 1286.98% APR on a loan of £300.00 with 5 monthly repayments of £101.03 Total amount repayable £505.13 Annual interest rate (fixed) 290%
Warning: Late repayment can cause you serious money problems - For help, go to moneyadviceservice.org.uk
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Author: Internal Customer Services Agent