Are Credit Checks A Good Idea

If you want to obtain a credit card or apply for a loan and are refused credit you want to know why, sending away for your credit file should be able to give you the information you need to find out why you were refused. Everybody wants to know how their credit rating is, but just how reliable are these credit reports and is the information given a good representation of your credit history.

The two main credit reference agencies are Equifax and Experian. The information given on your credit report will include any defaults on payments of credit cards or loans, county court judgments or if you have filed for bankruptcy. Most of the information included on your credit file will be of a negative nature as only negative information is given to credit reference agencies from businesses. All the good credit that you have had over a period of time will not be included therefore companies will only see the bad credit you have had cutting your chances of obtaining a good deal on a credit card or loan.

Your credit history is not the only factor you have to consider when applying for credit. Different companies look for different things when they are scoring you. The report from a credit reference agency is only a small part of the scoring system. Your housing situation and the amount of money you earn is taken into consideration and also if your earnings are a steady form of income.

You can obtain your credit file for only two pounds, although many people are not aware of this and pay much more. You can pay as much as sixty pounds for a credit report. You can obtain a much more detailed report if you pay more money but the basic report includes enough information for you to determine how good your rating is. You can get online alerts for when anything on your credit file changes or if something is added meaning you will be more aware if you are a victim of identity fraud. Many companies offer a service that gives you constant access to your file online averaging at about fifty pounds a year. Most companies offer a 30 day free trial period so if you are wise enough you can have this service for free much longer by switching from company to company, when your free trial period has expired cancel the direct debit and move to another company.

A few companies, one of which is HSBC, have now started to include the good credit that people have so lenders can have a better understanding of an individual’s credit history.

If you are applying for a credit card don’t rely on a good credit history to get a good deal as the credit scoring system is far more complicated. Knowing what information is contained in your credit file may be a good idea as if there is anything there that shouldn’t be you can start to take steps to rectify this