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If you're refused credit, a loan or mortgage, don't panic - you aren't on a credit blacklist. In fact there's no such thing. But to improve your chances of being accepted in the future you do need to know what process lenders follow when deciding whether to make you an offer, and the important role your credit report plays.
At the heart of the lending process is your credit report - a mass of information about your financial history that is collated and held by credit reference agencies such as Experian, the UK's largest. Your credit report includes data such as the number of loans, mortgages and credit cards you have, whether you have made your repayments on time, whether you have any court judgments and so on.
Your credit report also shows whether you are on the electoral roll at the address you have given. There will also be a record of the name of anyone you are financially connected with.
Lenders use a combination of your credit report and the information on your application form plus any past experience they have of your payment behaviour (if you're an existing customer) to decide whether or not to grant you credit.
You can view your credit report which lenders are currently basing their credit decisions on, by applying for a 30-day free trial of the CreditExpert Monitoring Service.
Although you are not on a credit blacklist, because one doesn't exist, lenders may consider you to be a credit risk, which will make it more difficult or more expensive for you to obtain a loan or credit card. According to Datamonitor, the independent market analyst, more than one in five adults in the UK are deemed non-standard.
It's a good idea to obtain a copy of your credit report to check whether there is any information missing or not up -to- date. You can check your credit report for free by applying for a 30-day free trial of Experian's CreditExpert Monitoring Service.
Experian can help investigate and amend any errors on your credit record. For example, if your report does not show that you are registered to vote, or if you've paid a CCJ and this isn't being reflected on your report. Experian will also inform other agencies of the changes.
If there are special circumstances surrounding a particular entry, for example, you may have been ill and missed a few payments on a loan, talk to Experian who will help you to add a short explanation to your report, so lenders can see that you are unlikely to default again.
There is no quick fix to a poor credit record but you should begin by trying to pay off overdue debts and then ensure that you pay your current and future bills on time. The CreditExpert website is full of suggestions and advice that can help you to turn your credit report round.
If you take these steps and check regularly to ensure that your credit report reflects the good habits you have learned, your chances of successfully applying for credit will be greatly improved - and you can put to rest once and for all the myth of the credit blacklist.
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