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How does debt affect a credit file?

i The advice on this page applies to anyone with personal debts taken out in the UK.

Credit files and debt. How does it work?

Your credit file, also known as your credit history, should show accurate information about you, the credit you've taken out, how you've managed repayments and court action taken against you.

Creditors use this information to decide whether to lend to you and what interest rates they will charge. You can look up your credit file to find out who you owe money to.

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What is my credit file?

Credit files are put together by credit reference agencies from information shared by lenders, along with other relevant public information. Your credit scores are then calculated by placing numerical values against the details recorded in your credit file.

It’s important to note that credit histories are more important to lenders than credit scores, because they include more detailed information than a score can provide. What is a credit score?

Your credit file helps lenders:

  • Carry out ID checks to make sure you are who you say you are
  • Check you live at the address you’ve given them
  • Decide the terms of any credit agreement with you

If a creditor decides that the information on your credit file means you may be a higher risk, they could:

  • Refuse you credit
  • Offer you a smaller amount of credit, or
  • Charge you a higher interest rate

Can I access my credit file for free?

Credit reference agencies produce and manage credit files which they share with creditors. A number of credit reference agencies offer a free one-month trial where you can access your credit file online.

The main credit agencies in the UK are:

  • Transunion (formerly CallCredit)
  • Equifax
  • Experian

What’s in a credit file?

Your credit file includes:

  • Your name, date of birth and any other names previously used
  • Your name and date of birth and any other names previously used
  • The amount you currently owe
  • Any late, partial or missed payments
  • Current or recent default notices and defaulted accounts
  • Any County Court judgments (CCJs), decrees and money judgements raised against you
  • Details of home repossession or debts secured against a previous address
  • Details of current or recent insolvency – including bankruptcy, individual voluntary arrangement (IVA) and debt relief order (DRO)

Contrary to what some people believe, it doesn’t include:

  • The amount of money held in any current or savings accounts
  • How much you earn
  • Details of student loans (awarded after 1998)
  • Council tax arrears and driving or parking fines
  • Your criminal record*
  • Your medical history

*However, a magistrates' fine can be registered on your credit file if it's unpaid.

How long does information stay on my credit file?

Information about missed payments, defaults or court judgments will stay on your credit file for six years. These details are always removed from your credit file after six years, even if the debt itself is still unpaid.

Details of the following stay on your credit file for six years from the date they were recorded:

  • Defaults on accounts
  • Debts you’ve paid off or ‘settled’ in full
  • 'Partial settlements' where a creditor has agreed to accept a reduced amount and write off the remainder of a debt
  • Bankruptcy, DRO, IVA or protected trust deeds being approved

If you have your bankruptcy restrictions extended because you’ve been found to have acted dishonestly or negligently, this can stay on your credit file for up to 15 years.

What is a credit blacklist?

There’s no such thing as a credit blacklist.

Creditors make lending decisions based on the information they find on your credit file, but they also have their own measurements and ways of working out who to lend to.

Lenders don’t depend on credit scores alone to make their decisions, and some credit card companies specialise in lending to people with bad credit histories.

Your credit history and your home addresses

Your credit history is about your use of credit. It isn’t a record of the financial history of people who’ve lived at your address.

This means you don’t need to worry about the credit histories of people who have previously lived at your address, or who currently share a home with you – unless you have any joint credit or debts, ‘linking’ your credit histories.

Linked credit files and joint debts

If you’ve taken out any credit agreement in joint names, with someone else, your credit file will show a link or association to them.

This means your poor credit history may affect them and vice versa. This could apply to joint loans or bank accounts, or cases where someone else has acted as a loan guarantor for you.

If you have any joint accounts included in your credit file but you no longer have any connection to the person involved, you can ask for your credit files to be ‘disassociated’.

This removes the link between your credit file and theirs. You can only do this if the joint account has been paid off in full and you don’t live with the other person.

To apply for disassociation, you need to contact the credit reference agencies directly.

What do I do if the information on my credit report is wrong?

You can contact either the credit reference agency or the lender to tell them, and they should update their records.

Will my credit history affect my job?

Some employers credit check new or existing staff, but this is only likely to happen in parts of the financial and legal services sectors.

Some employers credit check new or existing staff, but this is only likely to happen in parts of the financial services sector. If you think your credit history might cause problems at work, speak to your union rep, or ask to speak to your HR department confidentially about the possible consequences.

Can I get a mortgage with a bad credit history?

A mortgage lender will credit check you and they may refuse you a mortgage or charge you a higher rate of interest if you have a poor credit history. Some companies specialise in lending mortgages to people with poor credit, but they’re likely to charge much higher interest.

Can I rent a property with a poor credit history?

Many landlords or letting agents perform a credit check. You’ll have to give them permission to access your credit file, so you should know this is happening.

They may refuse you a tenancy, or they could ask for a guarantor or larger deposit. Some landlords only check public information such as the public registers of court judgments or insolvency, so a record of missed payments or defaults to other debts won’t always affect your tenancy application.

Will my credit affect my car insurance?

Insurers will credit check you, and if you pay in monthly instalments there’s a risk that a poor credit history could mean paying a higher rate of interest. In our experience it’s very unlikely that a poor credit history will stop you getting an insurance policy.

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