Not checking credit file a costly error
23 October 2008
The best mortgage and credit card deals have become more difficult to get, but by spending just £6 checking their credit files people could improve their chances and potentially make big savings, says a new report from Which?
A survey by the consumer organisation* found that 16% of Which? members who had checked their credit files found mistakes on them – ranging from incorrect personal information to evidence of identity fraud.
Lenders use credit files to help them decide whether to offer credit, and at what rate, so an inaccurate file can result in being turned down or charged a higher rate of interest. By spending just £6 people can check and correct any errors on their files, and could potentially save themselves hundreds of pounds. **
Two thirds of those surveyed by Which? had never checked their credit files, and those who had checked their file had usually done so with just one agency. Which? advises people to check their credit files annually with all three UK agencies – Experian, Equifax, and Callcredit – as they hold different information. ***
Martyn Saville, Senior Researcher, Which? magazine, says:
“Lenders have become more wary about who they offer credit, but checking that your credit files are up to date and accurate before you apply for a mortgage or a loan could improve your chances and ensure that you don’t end up out of pocket because of an error.
“You can’t afford not to check your credit files – it’s £6 well spent when you consider how costly and inconvenient a mistake on your files could be.”
- Ends –
Notes to Editor
Which? is the leading independent consumer champion in the UK, providing impartial, expert information on thousands of products and services to help make individuals as powerful as the organisations they have to deal with in their daily lives.
For more money advice go to: http://www.which.co.uk/money
The full article “File and error” appears in the November 2008 issue of Which? magazine. For further information, the full article, a copy of the magazine or an interview, please contact Nicola Frame.
Gift subscriptions to Which? can now be purchased from Borders, priced at £29.97 for six issues.
Research Notes
* Between 24 June and 4 July 2008, 1,984 Which? Online panel members took part in a survey about whether they had used a credit reference agency.
** Most lenders use a credit-scoring system which takes into account the information on people’s credit files, details on the application form and any other information they hold about the borrower. Different lenders use different scoring systems so people can be accepted by one lender and turned down by another.
Many lenders offer different interest rates depending on how creditworthy they consider an applicant to be, with highly-rated applicants getting the lowest rates of interest and less creditworthy applicants paying higher rates of interest. For example, on a £10,000 loan over six years, being charged 9% interest rather than 8% would cost an extra £354.
*** Of those who had checked their credit files, 77% had used Experian, 32% used Equifax and 6% used Callcredit. Each credit reference agency is legally obliged to provide the statutory credit report for £2, so people can check their files with all three agencies for £6 (some offer more expensive packages in addition to the statutory report).