What’s the score with credit reports?

As new research finds that confusion about credit reports is rife, Which? provides top tips to help consumers get to grips with theirs.

Credit reports play a key role in determining what financial products consumers can access and help people spot any fraudulent financial activity being carried out in their name, yet more than half (53%) of people we surveyed have never checked their credit report.  

 Despite how important credit reports are for life events like securing a mortgage or a car loan, there is widespread confusion about the basics; like what data is held by credit reference agencies, who decides if you get a loan and what happens when you check your credit reports.

New research from Which? uncovers common misunderstandings about credit reports:

  1. Credit blacklist: Three quarters (77%) of people incorrectly think there is a credit blacklist. Each lender will make its own assessment of whether or not to offer credit, there is no such thing as a ‘credit blacklist’.
  2. Credit reference agencies decide who gets credit: 60% of people incorrectly think credit reference agencies make lending decisions. This perception is understandable as lenders often tell rejected applicants to contact the agency for more info, but agencies have no say in the outcome of applications.
  3.  All credit reference agencies hold the same information: 54% of people wrongly believe all credit reference agencies hold the same information about them. There are three main credit agencies but not all lenders share information with all three agencies, so people can have slightly different reports with different agencies.
  4. Checking your credit report will damage your credit rating: More than a third (36%) of people think checking their credit report too frequently damages their credit rating, but this will have no impact on future credit applications. In fact, regularly checking your credit report is a good way to spot fraud early.

Alex Neill, Which? Director of Policy and Campaigns said:

“Every time you apply for a loan, credit card or mortgage, your credit report will be used to help lenders decide whether your application should be approved. So it’s worth checking your credit report regularly, particularly before you apply for new credit or to check you haven’t been the victim of fraud.”

 More information about credit reports, including what information credit reference agencies hold and ‘myth busting’ is available in Which’s Your Credit Report Explained Guide.

Notes to editors

  • Research: The survey was conducted in March 2016, with a sample of 1,067 general public respondents.

  • What to do if you think your credit score has been affected by fraud: A mistake on your credit report can negatively impact any future credit applications you make. To rectify an error contact the company which provided the data or the credit reference agency itself, which will investigate on your behalf.

    If the company agrees that an error has been made then your record will be updated accordingly. If it doesn’t and you are still unhappy, then you can add a 200-word ‘notice of correction’, explaining why you think the information shouldn’t be part of your report.

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