How is your credit rating?


WHEN applying for credit we all almost always become subject to a credit reference search to see what our credit rating is. A credit score, or credit rating, is a number based on a statistical analysis of a person’s credit fi les. The resulting score represents that person’s creditworthiness. A credit score is mainly based on information a credit reference agency (CRA) holds on your credit report, along with information you supply on your application form. Lenders, such as banks and credit card companies, use credit ratings to evaluate the potential risk posed by lending money to consumers and to decide who qualifi es for credit, at what interest rate, and what credit limits. It is hard to know if your


credit score is high enough to be accepted for credit with a particular lender. This is because of how complex the credit scoring system is, which differs from one lender to another. However you should consider the fact that this score is not actually passed on to lenders or anybody else searching your credit report.


Registering to vote can help


your credit score, but it doesn’t actually affect your score too much, and will only boost your score after you have been registered for some time (several years in some cases). The advantage of registering to vote at your current address is that it can help lenders searching your report to quickly verify your identity and residency. It is becoming ever more important to be on the electoral roll as some companies – store cards in particular – refuse applications if you are not registered.


Information about you Your credit report will only contain information about you. It will also show the name of anyone you are fi nancially connected to (fi nancial associations). Companies searching your


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credit report will see the fi nancial information in these other names and may use this when making a lending decision. Your likelihood of getting credit will be affected by the information recorded in the names of your fi nancial associates. Your score will not be affected in any way by anyone who has lived, or does live at your current address, if they are not on your credit report as a fi nancial associate. A fi nancial associate should only appear on your report if you have made joint applications with that person or told any company that you are connected fi nancially.


A defaulted account will affect Business Matters 5 b


your credit rating/score. Although you may have paid the default, and it will be marked as Balance Satisfi ed on your credit report, it is still a default. Satisfi ed defaults stay on your credit report for six years from the default date. Unfortunately there is no straight answer as to how many points you will actually lose due to the complexity of the credit scoring system. However, it is safe to assume that a defaulted account, even a satisfi ed one, will cause diffi culties when trying to get credit for the entire time it is on your credit report.


Credit Report


If you have ever taken out credit, a CRA is likely to hold a credit report on you. It’s a personal history of the credit you’ve had, including mortgages, credit cards and even mobile phone contracts. You can obtain a copy of your credit report by contacting the Credit Reference Agencies. A credit report provides a snapshot of your credit accounts, repayment record and how well you are coping with your fi nances. Your report shows whether you’ve made repayments on time and in full. Items such as missed or late payments stay on your


By MFW Partner and Insolvency Practitioner, Amanda Ireland


INSOLVENCY


credit report for at least three years, while Court Judgments for non-payment of debts, Bankruptcies and Individual Voluntary Arrangements stick around for at least twice that long. Your credit report shows the current address at which you are registered to vote as well as the previous one. It also contains details of other addresses you’ve been linked to in the last six years.


Identity Fraud Monitoring your credit report


can offer protection from one of the fastest-growing crimes of the 21st century — identity fraud. This involves criminals stealing your personal information and using it to take over existing accounts or set up new accounts in your name. Keeping an eye on your credit report enables you to spot suspicious entries and deal with problems before they escalate. If you think any of the information on your report is incorrect then you should write to the CRA explaining why you believe it to be wrong. The CRA may correct the information, remove it or do nothing. There is a procedure for appeal if you do not agree with the decision of the CRA.


MATTERS


The MFW experience – you said


What I like about MFW is that they adapt their accounting principles to my system. They have also modelled their services to my business.”


Chris Smith, Live Interactive Media Events Ltd


CAN YOU SPOT MILES? AND WIN YOURSELF £25


IN OUR last issue we asked you to spot where Miles the MFW bear was on one of his Kentish day trips. The fi rst correct entry out of the hat was from Jan Dennis and she wins the Christmas prize of £200. She correctly identifi ed that Miles was in Canterbury. Now, can you spot Miles on his latest trip? Just jot down where you think he is pictured and send your entry to your nearest MFW offi ce or send your entry with your personal details to: peteredwardspr@btinternet.com Good luck!


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