Introduction

In the UK, credit is an important part of everyday life. When we think about credit, the first thing that springs to mind is often a personal bank loan or credit card. However we take credit in many other ways. These range from mobile phone and satellite TV contracts to car finance and of course mortgage agreements.

The banks that supply credit approve applications using a number of different criteria. However, a significant source of information used during the application process is your credit rating.

Your Credit Rating and File

Your credit rating is largely based on your past history of taking and repaying credit. These transactions are recorded in a credit file. A credit file is a record of any credit agreements which you have taken out in the past six years and a history of their repayment.

Importantly, a credit file records whether your payments have been made on time, when payments have been made late and if any have been missed. It also provides a record of whether any agreement has been broken and a default notice issued or whether you have entered into a formal insolvency procedure such as Individual Voluntary Arrangement or Bankruptcy in the past 6 years.

Given that your credit rating and credit file are such a key elements in the decision about whether to grant credit, it is very important to understand the current status of your rating and if necessary how to improve this. The purpose of this guide it to help you do just that.
The first thing to do is understand what your credit file is and get a copy.