What is a credit report and why is it important?

Understanding your credit report is key to getting better credit deals

Experian – Consumer Credit Reference Agency

by Experian | Consumer Credit Reference Agency

Helping you stay in control of your finances and protecting your identity

A new phone, a step on or up the ladder, or a well-earned holiday? When your monthly salary just won’t stretch to cover everything, borrowing becomes a good option. But to get the best rates you need a good credit score, and this is where keeping a close eye on your credit report comes in.

What is a credit report?

If you’re over 18 and you’ve taken out credit or borrowed money before, credit reference agencies, like Experian, are likely to hold a credit report on you. Your credit report is used by lenders to decide whether you’re a safe bet and are likely to pay them back what you owe. It gives them a summary of how well you manage your finances, including things like your mortgage, credit card, overdraft, loan, mobile phone contract, and even energy bills such as gas, electricity and water. 

In a nutshell, lenders use these credit reference agencies’ credit reports to help them research your borrowing history.

How to check your credit report

You can check your credit report quickly and easily by signing up with a credit reference agency. By doing this you can gain access to your credit report which makes it easier to keep an eye on how your financial behaviour impacts your credit score. Your score is calculated using information on your report. So if your score goes up or down, you can find out why by looking at your report.

What's in your credit report?

  • Account information – including how well you manage them. Things like whether you’ve been making payments on time and in full, and any missed or late payments. Details like this - as well as bankruptcies, individual voluntary arrangements, and county court judgments – will stay on your credit report for at least six years and have a negative impact.
  • Financial connections – this is a list of people you have a financial connection with, like a joint mortgage or bank account. Known as financial associates, their credit history doesn’t appear in your report, but lenders can view it when you apply for credit. This is because their circumstances could affect you repaying your debt.
  • Address details – including electoral roll information for your current address and previous addresses, which you provide when you register to vote. It will also include addresses you’ve been linked to in the past, like those you’ve entered on lenders’ application forms.

It’s crucial you check all the information on your report is accurate, as even simple mistakes like an incorrect address can affect your score and impact the deals available to you.

Before making financial decisions always do research, or talk to a financial adviser. Views are those of our mentors and customers and do not constitute financial advice.