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Last Updated: Friday, 8 June 2007, 15:42 GMT 16:42 UK
Credit ratings: Your questions
Jill Stevens of Experian
Jill Stevens of Experian
All your queries, answered by Jill Stevens from credit information company Experian.

How can you get a default notice entry that is not true, removed from your credit records? Experian say they cannot remove a default notice, false or not, without the consent of the company who put it there and I can't contact them.

Chris.

It's true that Experian doesn't own the information it stores for lenders, but we do have a legal obligation to do all we can to ensure it is accurate and up to date.

When you query a piece of information on your report we mark it as 'disputed' with a note to lenders that explains it is being investigated and should therefore not be relied upon. Then we will contact that lender and query the information on your behalf, if you want us to.

If the lender insists the entry is right and you insist it's wrong we will advise you to add a notice to your report putting your case and we'll tell you how to take your complaint to the Information Commissioner.

As you're having no luck contacting this lender yourself, get in touch with us and ask us to contact them for you.

Can you explain how to clear a bad debt, that has since been paid, from Credit Agency records?

Sylvia.

Records of seriously bad debts that have led to a default, and things like court judgments, bankruptcies and Individual Voluntary Arrangements, stay on your credit report for six years. After that they fall off automatically.

During those six years the entries should show the status of the debt - in other words if it is fully or partially paid and how much is still owed.

You can't remove this factual information from your report (lenders need to know your recent credit history in order to make responsible credit decisions) but you should check that your report reflects the current position.

And you can add a notice - a paragraph of up to 200 words - to your report to explain any special circumstances that led to your financial difficulty. Lenders will see this and take it into consideration when you apply for credit.

Why do I get a bad credit score if I have changed addresses frequently in the last year but still manage to keep an excellent credit history? Surely, if someone moves around a lot in a short space of time they should gain credit score for keeping everything paid rather than be penalised for it?

Lorna.

Yes, you're right, the credit reference agency records your credit history. Lenders - and not the credit reference agency - decide who they think is going to be a safe customer.

Our CreditExpert service lets you see a score based on your report, but this is just a guide for you to get an idea of how the information is likely to be viewed by a lender.

Some lenders do interpret frequent house moves (which they would know about from your application form) as a sign of instability and this may affect your credit score (for detailed reasons probably known only to those experts who decide who is and who isn't a good risk).

So your moves may be the problem. But, equally, you may be having difficulty because you've not registered to vote - your credit report includes electoral roll details because lenders use this to help with identity checks.

If you're not registered, you need to be. If you are registered, and you've actually been refused credit, go back to the lender you applied to and appeal - if you explain the reason for your moves and stress your responsible attitude to credit the decision may be reversed.

Alternatively, you have the right to ask for any subsequent application to be decided 'manually' rather than by an automated system. This would give you a chance to explain how your job has made the moves necessary.

How can I increase my credit score? My rating was at the highest possible level for over 30 years however I fell behind with credit card and mortgage payments. Despite having repaid nearly all of my substantial debts my rating stubbornly remains at the 'poor' level, too low to obtain any form of credit. Could the problem be that I am retired?

Mr Barton.

Because lenders, and not the credit reference agencies, make the decision to grant credit or not, there is little point in lobbying Experian to improve your score. The information we hold is factual. The score we provide as part of CreditExpert is just a guide to how lenders will probably view that factual information. It's not the actual score a lender will give your application - scores vary from lender to lender and from product to product.

The credit reference agency doesn't hold information about your employment status or whether you're an owner-occupier - and those factors are not part of the score guide we can give you. Neither is your age.

However, you do provide those sorts of details to a lender when you apply for credit and they do take them into account. The chances are that your credit arrears are affecting your credit report score - but your report should also be showing how your situation has improved.

As it gets even better and all your debts are paid you will probably find a company willing to lend to you.

Is there is a regulatory body for firms like Equifax and Experian?

John.

Credit reference agences are very strictly regulated, most specifically under the Data Protection Act (enforced by the Information Commissioner's Office) and the Consumer Credit Act (the Office of Fair Trading). Consumers can also complain to the Financial Ombudsman Service. In addition there are officially-approved credit industry rules and codes that determine how credit data may be shared.

I have recently been declared bankrupt and unfortunately my parents' address was used on one of my loans. My parents are talking about taking out a small loan for some property maintenance, will they have any problems?

Mickey.

Your debts and bankruptcy won't affect your parents' creditworthiness in any way. That's as long as you have no formal financial links with either of them. A link would include a joint account of some sort or any arrangement where they had been a guarantor for a loan you've taken out.

Lenders can only take into account the financial circumstances of linked people when making credit decisions. If you have no links, your parents' application will be decided on their credit history and not yours, despite the address on the debt.

I have three credit cards, two of which I never use, and I pay the third off every month in full. The only long-term debt I have is a small mortgage. I also have a small three year personal loan. I've been told that I am not the sort of customer that banks and credit companies want. Will my credit rating be poor because of the way I manage my finances?

George.

I don't know who told you you're not the sort of person lenders are looking for but it's quite obviously not true since you have three credit cards, a personal loan and a mortgage. There's your proof!

The fact that you manage your finances well will be reflected in your credit report which will show your positive history with no arrears. As long as you're registered on the electoral roll and can demonstrate to a lender that you can afford more credit I should think any application you make for credit would get a very good score.

But it does depend on the lender. Credit card issuers do make money out of people who pay interest but as they profit simply from the use of cards, too, many of them are equally keen to have customers who pay on the nail.

Mortgage and loan grantors want you to keep up your regular payments on time. Although secured credit like a mortgage gives the lender the right to repossess your property if you fail to repay, this is not their core business and they'd much rather help you get out of difficulty than go down the repossession route.

How much financial information is contained in a credit rating file? I have a portfolio of various financial products so would details of this be included?

Roger.

The financial information on a credit report relates to credit agreements only. These can include credit and store cards, mortgages, personal loans, mail order accounts, mobile phone contracts and bank accounts with an overdraft facility. Other products, like insurance, savings and pensions, are not included.

You can see for yourself for 2 by visiting www.experian.co.uk or calling 0870 241 6212 for a paper copy of your report. Or take a free 30-day trial and view your report online at www.creditexpert.co.uk. If you go for the free trial and only want to see your report for a month remember to cancel your subscription.

Credit information company Equifax offer a similar range of services available from their website, www.equifax.co.uk

The opinions expressed are Jill's and not the programme's. The answers are not intended to be definitive and should be used for guidance only. Always seek professional advice for your own particular situation.


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