FINANCE - 31.10.2013

Correcting errors on your credit file

Your statutory credit file

Whenever you open a bank account, apply for credit, finance, a mortgage or other loan facility, the organisation you’re dealing with will probably insist on you passing a credit check. Many also demand that a director must pass a personal credit check where it’s the company that’s applying for finance. It’s a common misconception that the information searched is held in one central place. Instead, there are a number of credit reference agencies which are allowed to keep financial information about you and a credit check can be run by any of them.

No set rules

Interestingly, while they all agree that the treasured “999” is a perfect credit score, not all credit reference agencies apply the same marking criteria or, indeed, look at the same financial information to reach a conclusion about you and the risk you present. Also, and rather worryingly, mistakes in the personal and financial data that credit reference agencies hold about individuals are becoming increasingly common. Unfortunately, such errors can lead to an application for finance being rejected and a black mark being placed on your file.

That’s unexpected

So let’s suppose that an organisation does turn you down for credit. What can you do? First of all, the organisation won’t give you any information - it will simply tell you to contact the credit reference agency that it used. So be sure to do this and apply to the other main lenders for the credit file that they hold on you (see The next step ).

Now what?

Having done that, look at all your credit files separately - they won’t all be the same. Check your personal details, historical addresses, credit facilities (open and settled) and bank account details on each one. Where you spot an error, check whether the other credit reference agencies have duplicated it.

Tip. If they have, the error undoubtedly lies with the organisation that supplied that information.

Spell out the mistake

Either way, the first thing you must do is put the credit reference agency on notice of the mistake and ask it to correct it immediately (see The next step ). It won’t do this automatically - as it will want to investigate - but while it checks it out it should place a note on your file that marks the entry as being unreliable.

Tip 1. Usually, a genuine error will be resolved quickly. But you can ask each agency to add a “notice of correction” of up to 200 words, which explains your side of the story. There’s no charge for this and it will be seen by anyone who searches your credit file.

Tip 2. Should a credit reference agency - or the organisation that supplied the information - refuse to play ball, threaten to report it to the Information Commissioner’s Office for processing and holding inaccurate personal data.

For further information on how to apply for your credit file (CD 15.03.07A) and for a sample letter notifying credit reference agency of an error (CD 15.03.07B), visit http://tipsandadvice-companydirector.co.uk/download .