Once you have received the written copy of your credit file, you need to be able to understand what it says.

Credit Repayment Status History

Your credit report will record each credit account that you currently have active or have had in the past 6 years (even if the balance on the account is now £0). The file will show the name of the creditor, the date started, the outstanding balance and your payment history.

Every month when you make a payment to any account, there will be a numeric or Alphabetic record on the credit file to indicate the status of that account.

The numeric or Alphabetic records that you may see on your credit file are as follows:

0 = Payments are Up to Date
1 = Payments are up to 1 month late
2 = Payments are up to 2 months late
3 = Payments are up to 3 months late
4 = Payments are up to 4 months late
5 = Payments are up to 5 months late
6 = Payments are up to 6 months or more late

8 = The account is defaulted. You have failed to keep to your agreement with your creditor. As a result a Default Notice has been issued and the agreement has been terminated.

D = The account is not in use – No amount owed

U = The lender has not yet given the most recent months information at the time the file was printed.

A good credit rating will show a list against each credit account made up of all Zeros e.g.: 000000000. A poor credit rating will show a list against each credit account made up of different numbers due to late or non payments e.g.: 110220003321

Formal Insolvency Procedures

In addition to your repayment history, if formal insolvency action has been taken against you or you have undertaken any specific formal insolvency procedures, these will be shown on your file:

Default notice
If you consistently miss agreed repayments or stop paying a particular creditor for any reason, a Default Notice may be issued against you. This action will allow the creditor to close your account and demand immediate repayment of any outstanding debt. You should be aware of having received a default notice before looking at your credit report. The associated creditor will have send you a formal letter informing you that you have defaulted against the terms of your credit agreement as governed by the Consumer Credit Act of 1974.

The default notice will be specifically recorded on your credit file. In this way, the lender formally warns other potential lenders that they have had a bad experience of recovering debts from you.

County court judgement (CCJ)
If you ignore a Default Notice which has been issued against you, a common remedy used by many creditors is to pursue their claim for repayment at the County Court. The creditor will instruct a solicitor to lodge their claim for repayment at the Court local to where you live. You will then receive official documents from the Court, which you are obliged to return. They are distinctive as they are blue in colour.

County Court forms will give you the opportunity to agree that you owe the debt or to appeal it. If you agree, then you have the option of repaying the debt in full within 14 days. If you are unable to repay the debt in full within 14 days a CCJ will be made against you.

If you do not make a reasonable offer of repayment based on your financial circumstances and simply ignore the County Court forms, then the Court will assume that you agree that you owe the debt. The Court will then make a legal judgement regardless based on what it believes is a reasonable repayment amount for you to make.

Bankruptcy / IVA
If you have been through a specific legal insolvency procedure within the last 6 years such as Bankruptcy or Individual Voluntary Arrangement (IVA), this will be recorded on your credit file.

Clearly, these procedures are only used if you have had serious debt repayment problems in the past. You will normally be fully aware if you have been through one of these procedures as it is extremely unusual to have been through them without your consent or knowledge. Lenders will be made aware of the existence of these procedures in the information they receive from your credit file.  

Other Records

In addition to any formal insolvency procedures, your credit report will contain various other information which may help a potential lender decide whether they will offer you credit:

Electoral roll mismatch
Every year, your local Council will ask you to confirm that you are still living in your current address. This information allows the council to make sure you are correctly recorded on the electoral role and that you are registered for the payment of council tax. Many lenders will compare the residential address you have given them, to that recorded on the electoral roll. If the two do not match, then this may count against you in their scoring criteria.

History of Searches on your credit file
Every time you apply for credit of any kind, the potential lender will interrogate your credit file. A mark known as a search entry is then made on the file. This lets all lenders see how many times you have applied for credit in the recent past. The lender dealing with your current application would expect to see a few search entries. However, if there are an unusually high number, this might count against you in the decision whether to grant your application for credit or not.

Once you understand what is written in your credit file, you need to see how this will be reviewed by potential lenders you may want to take credit from. You may also want to understand the ways in which you can improve your credit rating.