money may make the world go around, but it’s credit that oils the wheels.
Long gone are the days where people saved for their needs.
Credit has become an indispensable way of life.
Yet few people realise that their credit rating, like their personal or professional reputation, is one of their most valuable possessions.
Unless it’s as clean as the driven snow, getting a credit card, home loan, or even a mobile phone without paying through the nose for it is completely out of the window.
So highly valued are your credit records that employers are checking job candidates’ credit reports as a guide to their reliability, and the gas and electric companies use them to weed out bad payers.
Streetwise reveals some important things you need to know about your credit report, and how to avoid it being hijacked by fraudsters.
n Who keeps your credit record?
It’s tempting to think that out in the nebulous realms of cyberspace, someone is beavering away keeping tabs on how well you manage your credit.
The reality is that a number of credit reference agencies compile information from banks and other financial institutions about the loans you have applied for, your identity, and just what products you own and use.
They report a full list of your transactions to the credit reference agencies, so there’s not just one file on you, but one for each of the three main companies in Britain that store credit data.
Experian is the market leader, followed by Equifax and Callcredit.
With different lender information going to all three companies, there is always a risk of mistakes or omissions on one or other files.
Lenders also use different agencies when they want to check your rating.
n Who can see your credit report?
Any company or financial institution that receives an application for credit from you will consult their agency’s files. It’s not just banks or loan providers. As soon as you apply for credit to be advanced in some form or other, the lender will first check you out with their credit reference agency to check your total credit score.
You have an automatic right under the Data Protection Act to know what’s on your file. For a fee of £2 you can see what they have on file about you by writing to any agency requesting a copy of your report.
It pays to spend £6 a year just to check out your reports to satisfy yourself there are no errors that may need correcting, or you’ve not been a victim of identity theft.
n Dealing with fraud
A good credit rating is a gold star opportunity for fraudsters. By cloning your identity they can run up thousands of pounds of debt in your name, and only when you are unexpectedly refused credit may it come to light.
Protecting your identity is all down to you. Never dispose of credit card, bank, or other statements including gas and electricity bills without first shredding them, and avoid giving any of your personal financial security information to anyone over the phone or the internet.
If you discover fraud after looking at your credit file, immediately alert your bank or any other lender that it has been ripped off by thieves.
They will advise you about contacting the police and the credit reference agencies.
The agencies will identify all the fraudulent transactions with you, contact the lenders, and notify each other.
n Credit history problems
Credit reference agencies have a responsibility to ensure that the data they keep about you is correct. It does you credit to make sure the information is always up to date.
If there are errors, such as someone else’s debt ending up on your records, contact the agency and have the mistake corrected.
One of the key pieces of information agencies hold about you is whether you are on the electoral register for your address. If you’ve recently moved you should register with the town hall as a matter of routine.