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Financial worries or just looking for better value for money? Consumer champion Fergus Muirhead can help

SEVERAL readers have asked about credit checks recently so I’ve decided to answer them all in one special piece today that looks at how they work and what you need to do to get your finances in order before a prospective lender looks at yours. All lenders use credit checks to help them decide whether you should be accepted for a loan, so it is important to understand in detail how credit reports work, what your credit file will look like and what you can do to make sure you have as high a score as possible. This week, we will look at how your credit report is made up and what information it contains. I’ll come back in a couple of weeks to give you advice to make sure your credit score is as high as it can be and what you can do to rebuild your credit history if you’ve had problems in the past that have affected your ability to borrow. As well as containing all your basic information like your name, date of birth, current and previous addresses and a note of whether you are listed on the Electoral Register, your Credit Report contains lots of information

Dispelling myths about credit checks

about your credit history and the way you’ve managed bank accounts, credit cards and loans in the past.

It will detail whether you have kept up with payments on these loans and will show late or missed payments.

Details of late or missed payments could stay on your report for up to six years, as will any court judgments and bankruptcies.

Your credit report will also contain details of the way you manage bills such as mobile phone contracts and utility bills and whether you have kept them up to date.

A lot has been written about making multiple credit applications and whether this is likely to damage your ability to get credit. It is true that other lenders who have searched your file when you have previously applied for credit will be noted on your report, but this doesn’t necessarily mean multiple applications will do you a great deal of harm.

Each lender that you apply to will read the information contained in your credit report in a different way, so just because you have been rejected by one lender doesn’t mean you will be rejected by others. Which agency? There are three main credit reference agencies in the UK today – Equifax, Experian and CallCredit.

If you haven’t checked your report