We all know the importance of keeping an eye on our credit score/credit rating. However, I’m not an expert on the topic. So, I spoke to the lovely Sara Williams, who runs the Debt Camel blog where she writes about everything to do with debt including credit ratings, and some of what she said surprised me. Here’s our discussion on the best credit reference agency;
Cora: I know there are three credit reference agencies (CRAs) in Britain: Experian, Equifax and Call Credit. Which is the best one to use?
Sara: Actually there are more than three. Two more, Crediva and Credit Kudos, have opened in the last couple of years, but they are tiny, so let’s ignore them!
It sounds obvious that you should choose the best one and check that. But the problem is that each of the CRAs only has part of your credit history because it’s up to a lender to choose who to report to. Some of the biggest lenders report to all three CRAs, but many of the medium and smaller ones only report to one or two.
So you could look at your report from Experian say and a loan you have may not be there. If you have paid that loan on time, then that means your credit score from Experian may not be as good as you think it should be because it’s missing that loan. But if you made some late payments to that loan, then your Experian score looks higher than it should be.
Cora: So you have to check them all to see the full picture. Is there an easy way to do that?
Sara: I have an article that I keep up to date with all the different ways to check your credit score. At my last count there were twelve different reports you could get. I expect there may be a few more by the end of 2018, as they seem to be multiplying!
There are now good – and free! – options that let you see your records from each of the CRAs. The days when you had to spend a fortune each month to get this information have gone.
But there isn’t a single report that lets you see all the data from all three CRAs combined, which actually what most people want. So I tell people that if their credit record matters, perhaps you want to get a mortgage in the next couple of years, then you have to check all three CRAs.
Cora: Is there a good reason why this has to be so complicated?
Sara: I think it’s just evolved this way. Ten years ago not many people were that interested in their credit records, they were mainly used by the lenders.
It’s hard to imagine anyone would have planned this deliberately! I have never met a consumer that sees any point in having three different CRAs. People want to see one combined report that covers everything, not to have to check multiple reports. And if something goes wrong, it means you have to try to sort out problems at three different CRAs.
Cora: And lastly, do you have a top tip for preventing credit record problems? Paying everything on time I suppose, but are there any issues to be careful about?
Sara: There are two situations where it’s easy to get a default or even a CCJ on your credit record that you knew nothing about. The first is if you have moved and not told the DVLA. Any notifications for parking tickets will be sent to your old place, and the first you know is where the bailiffs knock on your door because it’s already been to court. So if you have a car, make telling the DVLA one of the first things you do when you move.
The other one is where you have switch mobile phone providers. You have paid the last bill, cancelled the direct debit, ported your number, all’s well and then a year later you are declined for a loan because there is a default on your credit record from the old mobile co. Whenever you cancel a direct debit, make sure you phone up and double check you don’t owe any more. This applies to all sorts of bills, but in my experience, mobile contracts give the most problems, so look out for them!