Credit Reports Will Gather Extra Information
25th February 2013
Credit reference agencies are seeking to access new sources of information that they’ll use for our credit reports in the future. This provides both an opportunity and a threat to anyone that is seeking to improve their credit report in the aftermath of a Scottish trust deed, sequestration (bankruptcy) or debt arrangement scheme.
The sources of information currently used by credit reference agencies to help their clients make lending decisions are more limited than many people assume. The data displayed includes credit card and loan accounts, current accounts, and mobile phone contracts. The date the account was opened, the credit limit, the current balance and the history of repayments are all shown.
Credit reports also display statutory information (for example entry onto a register after signing a trust deed) and any reports of fraud that might be associated with an individual.
Credit reports often also provide you with a “credit score”. It’s important to remember that this is purely indicative, just an estimate by the credit reference agency of what a typical lender might think about you as a possible borrower. In reality all lenders make their own analysis of the data on your credit report alongside the information you provide in a credit application.
Last year Experian introduced a service by which the payment record for renting a home might be added to your credit report. There now appears to be a push to capture further information such as your payment record for gas, electricity, landline telephone or a TV package.
Some utility suppliers currently tell the credit reference agencies if someone falls seriously behind on their payments. One major water firm will now report on the payment record of their several million customers, both good and bad. The credit reference agencies are keen that many other similar types of firms with millions of customers should follow suit.
There may also be an argument for even more information being added to credit reports in the future. For example, sharing data on savings accounts might help lenders to make even more informed lending decisions. This might assist potential borrowers that had set some money aside as they could be seen as financially conservative and therefore less risky.
Increasing the scope of the information captured by the credit reference agencies in the future should be considered to be good news by those that wish to improve their credit rating after experiencing debt problems. Positive reporting of energy bills, a landline telephone contract or a television package could be a great extra source of positive credit history that can be built up relatively quickly.
There is of course a threat as well. Anyone that is financially disorganised may find that a missed payment for a phone or electricity bill affects their credit status in the future. This should encourage extra caution to make sure payments are made on time, most probably by setting up direct debits to eliminate as much human error as possible. Instigating direct debits for regular bills and repayments appear to be extremely effective and helpful for the majority of people that are seeking to repair their credit status.
Adding additional information sources to credit reports appears to be a trend that will develop in the coming years. We’ll report further on the subject when new developments come to light.
Would you like to see what information the credit reference agencies hold about you? A free trial of the CreditExpert service can be arranged at: http://www.trust-deed.co.uk/freecreditreporttrial.php
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