How Does My Credit Report & Credit Score Affect Me?


Your personal credit report can be used by numerous people in several different ways. The effects of your credit report can span over a far reaching part of your life, so it's important to see your credit score so that you can consider how, where and when it will impact on your life.

Your credit report doesn't just affect how much you can borrow, it can also affect things such as your employment and whether you can rent a flat. Here is The Credit Agency's guide to how your personal credit report can affect you:

Your Credit Rating can affect whether you can get a loan
Whether you are seeking a secured loan, or an unsecured loan lenders will carry out credit searches on you to ascertain your credit worthiness. A loan company will have to have permission from you to carry out a credit check on you, which is generally a condition of your credit application.

The loan companies will use the data gathered from your credit history and place it into their credit models in order to make their decisions based on various credit risk factors (each lender will have their own credit decision models developed purely for their requirements). When conducting a personal credit check on you, the loan companies will be looking at your previous credit history (looking for things such as your payment record, number of other credit applications, how often you change address, whether or not you are on the electoral roll). Each creditor will use different credit scoring techniques to ascertain how credit worthy you are.

Simply by conducting a credit check on you, the loan companies are already having an impact on your credit report. When a credit check is carried out, a 'Footprint' is left on your credit report. This credit footprint indicates which lender has conducted a search on your credit file and when the search was carried out. These credit footprints are held on your credit file for a period of a year.

Generally speaking, if lenders see a large number of credit footprints on your credit report in a short space of time, they will consider you to be higher risk borrower as it could illustrate that you are struggling financially and are needing to borrow funds in order to manage. A large number of credit footprints left on your file within a short space of time could also mean that someone is attempting to commit identity fraud against you.

At The Credit Agency, We recommend that over any 6 month period you shouldn't make more than 2 new applications for credit.

In summary, the worse your previous credit record, and the greater the number of credit applications that you make, the higher your credit risk is deemed to be.People with a high credit risk often quote themselves as being credit blacklisted. In fact, there is no such thing as a credit blacklist. It is simply a case that loan companies price their lending services against credit risk, which means that the higher the risk level you are deemed to be at, the greater the level of interest you are going to have to pay back and the lower the chances are that you will be able to obtain credit.

Try hard to manage your credit file well so that you can be considered a good candidate for prime loans and avoid needing to get adverse credit loans or bad credit loans (commonly known as sub prime loans).

Your Credit Report affects whether you can get a credit card
Credit card companies operate in much the same way as loan companies in their credit decision making process. Credit card issuers will also check your credit report (with your permission), will put your credit data through their decision models and will also leave footprints on your credit report.

Credit cards are revolving forms of credit (forms of credit where you are not constantly reducing your credit balance). Due to this, credit card companies are often more stringent in their credit decisioning process. This means that you will often need a better managed credit report in order to get a credit card, than you will in order to get a loan. (You may have already noticed that there are more loan products for adverse credit records compared to credit card services for poor credit ratings).

When repaying your credit card month on month, the credit card companies will file your credit data with credit reference agencies. This data shows how promptly you pay according to your credit terms (this is your credit history). Manage your credit well and you will be making yourself into a better candidate for a credit card in future. See which credit reference agencies each loan company uses.

Believe it or not, your credit report can even affect your ability to obtain a debit card.

Your Credit Report affects your mortgage
Undoubtably, a mortgage is the biggest credit application you are likely to ever make. As with credit cards and loans, your credit report will be checked, credit footprints will be left and your credit data will be recorded with the credit reference agencies. The quality of your credit report will impact on your mortgage.

Your Credit Report can affect your employment
Did you know that your personal credit report can affect your ability to get a job? Well, your credit report can have an impact on your ability to get employment.

Some employers will want to check your credit report prior to you being awarded a particular job. Credit checking as a part of employee screening is most common in financial institutions such as banks, credit card companies, lenders, pensions funds, stockbrokers, invoice finance providers debt collection agencies as well as insurance companies.

The reason that these organisations will credit check you is that if you work for them you will often be dealing directly with peoples personal finances or the finances of businesses. In the wrong hands, this financial information could be put at risk (could be used for things such as identity fraud).

If you have a poor credit record yourself, employers could view that you pose a greater risk to the financial information that they hold - you could be more tempted to fraudulently use the financial information that you are working with.

Every employer will have a different view as to what a poor credit record is, and whether or not this would have an impact on you gaining employment with them. If you are worried about whether your personal credit report could have an affect on getting a job, then you should contact that companies human resources department directly and discuss the matter confidentially with them.

It's important to note that such companies are also likely to credit check you on a regular basis (generally credit checking you yearly), as peoples credit records can change over time.

Your Credit Report can affect your ability to rent a property
So, you are thinking of moving to a new property. You've seen a house or flat that you'd like to move to and have made the decision to apply for tenancy.

Prior to allowing you to rent a property, estate agents, letting agents and landlords will often want to conduct credit checks on you as part of the tenancy application.

By letting a property to you, landlords are effectively putting their ability to pay the properties mortgage in your hands, so there are a number of things that they are going to want to check.

Landlords will look to your credit report to verify your previous address information and to see that this ties up with what you have listed on your tenancy application. If this information doesn't match up, it could indicate that you are not being truthful about your previous residence - you may be trying to hide something from your prospective landlord.

The letting agent may also look to see how frequently you have moved property. Do you have short periods of tenancy at each of your former residences? This could also indicate a risk to the landlord, as there could be underlying reasons behind only staying for a short period of time.

It goes without saying that landlords will also check your payment history. If you pay all of your other credit facilities well, then it is also likely that you will pay your rent well.

Normally letting agents, estate agents and landlords will use the services of a third party to carry out the credit checks on their behalf (as they are unlikely to have resources to conduct credit checks themselves). If you are a landlord, then the main credit reference agencies (Equifax, Experian and Callcredit) will have the facilities to carry out credit checks on your behalf.

Credit check your personal credit report online here.

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