What is a Credit Record?
Your credit record contains a detailed history of the credit you have. Your debts and the repayments you make for these are tracked by credit reference agencies in the UK such as Experian, Equifax and Callcredit. Whilst each agency operates in slightly different ways, these agencies compile your credit history by gathering information from various places including your bank and other credit providers. They collect information on your payment history, credit limits, high and low bank balances, overdraft usage, how much of your available credit you use and even changes in your address and work history.
Each credit reference agency compiles this personal financial information to give you a credit score which can then be used by lenders to work out how much of a risk you represent if they lend you money. Bad credit loan providers generally use a ‘rate-for-risk’ pricing policy. They use your credit score to determine the interest rate at which they are prepared to lend to you so if you have a low credit score, you may be charged a higher interest rate.
If you have a bad credit rating then don’t worry, there are things that you can do to improve it and repair your credit rating. You can clean up your credit history by managing your debts and not missing any payments. After six years, any negative data that degrades your credit score is removed from your record, allowing your score to increase – but this depends on you keeping your finances in order.