Your credit file explained

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Your credit rating explained

Each network has their own criteria when deciding who is accepted for a new mobile contract just as credit card and loan companies do and whilst each will have different requirements for different products, phones and tariffs they will all use at least one credit reference agency to base their decision on. So if your are looking how to get a mobile phone with bad credit you have come to the right place.

So it is important you know how they work, the information they hold, and how you can view and if needs be amend your credit file.

What are credit reference agencies?
Credit reference agencies are commercial companies who compile information from a number of different sources, including public records such as the electoral roll and county court judgements together with information from financial institutions who you are or have been associated with.

This information is brought and used by mobile phone networks, loan, credit card, banks and mortgage companies to help them decide whether or not to grant an application for a phone, loan or other financial product.

In the UK we have 3 credit reference agencies Experian, Equifax and Call Credit its very rare lenders use all of the agencies and information held by each often differs.

So what information do the agencies hold?
Credit Agencies store personal information obtained from previous credit applications and accounts. Which includes your name, date of birth, current and past addresses.

The part the networks and lenders are most interested in is you credit history, this section of your report lists your credit accounts when they were taken out, how much for and your payment history including any missed or part payments.

This information will stay on your account for 6 years after the account has been settled and closed, and in the case of products such as credit cards or other revolving credit products these will remain until formally closed.

Credit searches remain on your file for up to 2 years, these searches are carried out whenever you apply for any finance, loan, interest free credit, credit card or mobile phone contract.

Your file also shows the name of your current bank account provider, but will not show further details about your bank account unless they are relevant for the purposes of granting further credit - for instance if you have an unauthorised overdraft.

Public record information such as county court judgments, house repossessions and bankruptcies are also on your credit file. This information also stays on your credit report for six years.

Information credit reports do not include are savings accounts or personal information such as religion, political affiliation, medical history and criminal records.

All the information on your credit file is used to calculate a credit score although this does not form part of the report itself.

What are the Networks looking for?
Together with the income, employment details you provide on your application networks use your credit file to assess how well you have handled your credit commitments (if any) in the past. Based on all of this information they decide how much of a risk you are before accepting you for a contract.

The networks also use your credit file to check your name and address against the electoral roll, so you may have problems if you are not on it and in most cases this is the only check required for SIM only contracts.

You may also struggle to get accepted if you have never taken out credit before (a credit builder card may also help here), or if you already have too many loans or credit cards.

There is no "blacklist" of people who will not be given credit - each network analyses the information according to its own rules, so you may be turned down by one network but accepted by another.

Beware of making multiple applications - a large number of credit searches in a short period of time looks bad to many networks.

What can you do if you are refused?
No network has to provide you a mobile phone or contract. It can turn you down altogether, offer to provide you a different tariff than you requested, or charge a security deposit before providing you a phone and or contract.

You can however ask to have your application reconsidered if the network has made its decision just using a computerised credit scoring system or if you think your have other relevant information.

The network must tell you the name of the credit reference agency it used to view your credit file but it does not have to provide a detailed explanation of its decision.

Checking your file
Even if you have not been turned down for a mobile phone or other credit, it is a good idea to check your file a couple of times a year maybe, to ensure the information on them is correct.

Under the Data Protection Act, credit reference agencies must provide you with a "Statutory Credit Report" for a fixed fee of £2. You will need to give them your full name, date of birth, current address and previous addresses for the previous six years.

The statutory report contains your basic credit file and should be posted to you within seven working days although agencies can ask for further proof of your identity before supplying the information.

You can also view your credit files and credit scores online instantly for a higher fee, most offer 30 day free trials and then charge a monthly fee thereafter if not cancelled.

Correcting any mistakes
You do have the right to dispute any inaccurate information on your credit file, and to have errors corrected. But you cannot get information removed just because you find it embarrassing.

Sometimes there is negative information on your file about people in your family with who you have no financial connection with, you may ask the agencies to "disassociate" you from them this will improve your credit score.

To dispute account information on your credit file you should first contact the relevant creditor they should then update there own records and inform the credit reference agencies to update theirs within 28 days. If the creditor proves unhelpful you can contact the credit reference agencies directly to review your files. If you are still unsatisfied you also have the right to attach up to a 200 word “Notice of correction” to your file detailing your disagreement this is read by potential creditors before they make their decision and in many cases stops your application being automatically rejected.

If the credit reference agency does not reply within 28 days, or refuses to process your Notice, you can ask the Office of the Information Commissioner to investigate whether it has breached the terms of the Data Protection Act.

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