What is your Credit File?
Your credit file is a record of all the different credit facilities which have been granted to you. Every person who has ever used any credit facility in the UK has a credit file.
All credit facilities which have been taken in the past 6 years (even if they have been repaid in full) will be recorded on the file.
Importantly, the credit file provides a history of the repayments that you have made against each credit facility. So for example, every time you make a repayment to a personal loan, this transaction is recorded on your credit file. If the payment has been made late or has been missed completely a record is made on the file.
In addition to the payment history of each credit facility, additional information is recorded on the file such as if a default notice has been issued by the credit provider. Other personal insolvency proceedings such as the issue of a county court Judgement
(CCJ), bankruptcy order or home repossession are also recorded.
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Why is your Credit File Important?
If you apply for credit – i.e. apply for a new credit card, personal loan, mobile phone, mortgage, car HP or even to rent a property, the lender involved will check your credit file to help them assess whether you are a suitable person to lend to or not.
Your creditors cannot see all your personal information. However, they have access to the history of whether you have taken credit in the past and what your history of repayment is like i.e. have you made payments on time or not. They will use this information to help them make a decision about whether to lend more money to you or agree to giving you a new mobile phone contract.
Your credit file is not the only basis for lending decisions
It is important to understand that your history of taking and repaying credit is NOT the only criteria used by potential lenders when making a decision about whether to offer you a new credit agreement. Lenders also use additional criteria such as how long you have lived in your current accommodation and whether you are a home owner etc. However, if your credit repayment history is good, then this will set you in good stead.
