Guide to Credit Reference Agencies

When it comes to your credit score, three agencies in the UK hold your information. If you apply for a loan or mortgage, the lender will use this information to decide on lending you the money. A lender may use the credit report from one or more of those agencies when processing your application.

The three credit reference agencies (CRA’s) in the UK are: 

  • TransUnion
  • Experian
  • Equifax. 

Each of these companies creates a file for you. Within the file, they gather certain information, and this is used to calculate your credit score.

What information do CRAs hold?

Each of the credit reference agencies gathers information about your financial history and other details that create your credit report. The information in your credit report includes:

  • Credit commitments you have had in the past
  • Payment history
  • Previous addresses
  • Current loans and mortgages and how you are managing them
  • Electoral roll information

By taking into account all of this information, the credit reference agencies give you a credit score. Any new lender you approach for credit will look at your credit score to make a decision.

Why are there three Credit Agencies?

Lenders may only report to certain agencies so your credit score can be different across all three companies. Your previous mortgage lender may report information to two of the agencies. At the same time, a loan company gives information to all three.

Because of this, the scores held by different agencies can vary. A new lender may use one or more of these CRA’s to help them decide on lending you money. Each of the agencies has a different method of calculating your credit score. With Experian, your credit score is out of a maximum of 999, while TransUnion is 710, and Equifax is 700.

Should I check my credit report?

The credit report is used for any credit you want, including mortgages and loans. It is vital to check your credit report. As a general rule of thumb, you should request your credit report from each of the three agencies once a year.

There are ways you can access your credit reports for free. Some companies can help you fully understand the information on the report, and there may be a fee for this.

Good news – FriendsCapital has partnered up with checkmyfile – the UK’s only multi-agency credit report – check your credit reportThrough checkmyfile, you have access to the information held at the three credit reference agencies in one dashboard. If you’d prefer to access each of them directly, the information is below.

Experian – you can sign up for a free 30-day trial with the Experian CreditExpert service. It allows you to access your report for free for one month, charged at £14.99 per month after that.

Equifax – ClearScore gives you access to your Equifax credit report free every month. Equifax also offers a free trial of their monitoring service so you can access your report. After the free trial, you pay £9.95 per month for access to all of your information.

TransUnion – you can access your TransUnion information for free through a service called Credit Karma (previously known as Noddle).

Fixing mistakes on your credit report

When you have your credit reports from across the three UK Credit Agencies, you will need to go through all of the information. If you see anything on the report that you don’t recognise and believe is a mistake, you will need to get it fixed.

A mistake on your credit report can be anything from errors in your bank details or incorrect address details. Any inconsistencies like this will deter banks and lending companies from giving you credit. If you spot a mistake, you can contact the credit agency and request that it is corrected. The agency has 28 days to respond to your request. 

Your credit report is a record of your financial history. Checking your credit report is an essential part of keeping your financial records healthy. Now you know your score you can work on improving your credit score and increase your chances of being accepted for credit in the future

Concerned you’ll be refused credit? Talk to Friends Capital.

Friends Capital help individuals with all types of credit score, if you need a bad credit mortgage or you’re looking into debt consolidation, we can help! 

Do I need a solicitor to remortgage?

Quick answer, not always. Whether you need a solicitor of not will largely depend on the complexity of the remortgage and whether you’re changing lenders or not. 

When don’t I need a solicitor for a remortgage?

You don’t need a solicitor to remortgage if you’re doing the following:

  • Getting an advance. If you’re borrowing more on your existing mortgage with your current lender, then no legal charges are involved in this type of arrangement. 
  • Product transfer. If you are staying with the same provider but moving to a new rate or a deal, it doesn’t require any additional legal work. 

When should I use a solicitor for a remortgage?

Here are a couple of situations when you’ll need a solicitor to be involved:

  • Add someone to a mortgage. If you’re adding a new person to your mortgage, e.g. a friend or partner you’ll need a solicitor to draw up paperwork to reflect a change in ownership. This process is referred to as a transfer of equity. 
  • You are removing someone from a mortgage – the reverse of the above. The ownership of the property is changing, and the documents need to reflect this. 

The majority of lenders will include free legal services when you remortgage (Friends Capital can advise on this). If your chosen lender doesn’t offer a free service then shop around.

Should I use the remortgage lenders’ solicitors?

If it’s free and part of the service then you won’t have much choice, however, if you’re paying for your own solicitor, you have the right to shop around. 

What does the remortgage solicitor do?

Remortgaging is undoubtedly less complicated than purchasing a home; the following is usually checked as part of the process. Some of this may not need to happen if you are staying with the same lender.  

  • ID checks – to protect against money laundering
  • Check your existing mortgage – they’ll check how much you owe and if there are any exit or early repayment fees
  • Valuation – your new lender will value the property and provide a mortgage offer to you.
  • The fine print – your solicitor will check over the terms of the mortgage offer and raise any issues with you.
  • Land registry – they’ll check the land registry records to make sure nothing has changed since the process began
  • Completion – your solicitor, will oversee the completion – paying off your old mortgage and any fees and send the remaining money to you. 
  • Update the land registry – once this has all happened, they’ll update the land registry with the new details.

Do you further questions?

Contact Friends Capital – we’re here to help. Our team has vast experience in the remortgage process and can help you find the best lender for your circumstances. 

How lenders decide to give you credit

When you are looking for credit, the lender will need to make a decision. They will look at various factors to decide to offer you a loan or any other form of credit. By looking at these factors they are able to determine the risk of lending to you. Based on the level of risk, your loan may be declined or approved. 

If you have bad credit, you may still be able to get a loan or mortgage. The lender may give you the credit with a higher rate of interest to offset the risk. Here we take a look at what lenders use to decide to give you credit.

What lenders look at before offering you credit

Any application for credit will need a credit check, but that is not all lenders will look at. Your credit score will be the main factor, but other things are taken into account too. Lenders will use the following to decide whether to give you a loan:

  • Credit score
  • Employment history
  • Income
  • Length of time at current address

Credit score – Your credit score uses various information to show an indication of the risk of lending money to you. Different credit agencies hold information about you. A lender may apply to one or more of these to assess your suitability for a loan or mortgage. Please read our 7 tips for improving your credit score.

Each lender or financial institution will usually have a minimum credit score they will accept. If your score is below this, the loan application may be refused. You may still be able to get a loan, but the bank may decide to offer you a lower amount.

When you apply for a loan, the bank won’t tell you your credit score, but you can ask which agency they use. You can request a credit report from the credit agency. 

Employment history – Your credit score is essential, but lenders are also starting to look at employment history. A proven track record with the same company for several years is more appealing to banks. It shows that you have a stable job and a reliable income. You will be able to make your payments each month and be more likely to keep up with loan commitments.

If you have a history of jumping from job to job, a lender may be less likely to offer you credit. It can cause concern to a mortgage company if you tend to move position regularly. You may not be able to get the loan you want. The lender may still offer you a loan but may offer a higher interest rate.

Income – Your income is just as relevant to a loan company because it shows what you can afford. A steady income indicates that you will be able to manage your money. Inconsistent earnings, such as commissions, etc. may not be taken into consideration. If you have a low income, there may not be enough money coming in to meet the debt repayment. 

Personal income is a big thing to a lender and will affect the loans and interest rates you can get. Bear this in mind when considering any loan amount you may want.

Length of time at current address – As with job stability, the length of time at your current address is also important. If you have been at your existing home for many years, it’s a good sign to lenders. It shows you can manage mortgage or rent payments. The bank will see that you can handle financial commitments over a period of time.

Information on your credit file

As your credit score is an integral part of a loan application, it is crucial to make sure the information is correct. Credit reference agencies keep information on your borrowing and payment history. Any application for credit allows the lender to check your credit reference file.

Credit reference agencies collect information from:

  • Electoral roll – addresses where you were registered to vote and the dates
  • Account information – your current loan commitments and bank account activity
  • Public records – they will see any bankruptcies, court judgments or debt relief orders
  • Linked people – anyone you may be linked with financially, such as a joint account or mortgage
  • Searches – details are kept about any credit searches over the last 12 months

There are three main credit reference agencies. A lender may use one or more of these when deciding on your loan. If you are refused credit, you can ask which agency was used. You will be able to apply to that agency and see your information. 

It is crucial to go through everything they have on your file. If there are errors, write to them and let them know. The errors may be affecting your overall credit rating. Getting the problems fixed can help improve your credit score.

What to do if you have a low credit score

If you have a low credit score, you can still get some forms of credit. Many banks have loans for low or bad credit scores. These types of loans often have higher interest rates than others. Because it is considered a higher risk, the bank raises the interest rate to offset the loan risk.

Alternatively, the bank may ask for a guarantor for the loan. A second person signs an agreement to repay the loan if you don’t. It can allow you to get the credit or loan you need. The bank has another person that will be liable for the loan, so they take less risk.

A guarantor will be on the hook for your loan if you don’t pay it. Make sure the person is aware of this before signing anything. The bank will also check the credit score of the guarantor so you will need someone with good credit.

If you are looking for mortgage deals or loans for people with bad credit, we can help. We work with a variety of banks and lenders. Our experts can find the right solution for your credit needs.

Remortgage with Bad Credit

If you have bad credit, you may think you are not able to remortgage, but it is possible. It may be easier for people with good credit to remortgage, but there are lenders out there that will work with you. People find themselves with bad credit for many reasons. It can affect the loans or remortgage deals you qualify for; however, there are options available.

Remortgaging with poor or bad credit

While many lenders will not be forthcoming with offers for remortgaging with bad credit, it doesn’t mean you won’t be able to get the loan you need. Bad credit is an issue for banks because bad credit makes you:

  • Seem a higher risk to lenders
  • More difficult to get loan approval
  • Additional work is required for bad credit remortgage offers

Although bad credit does make banks cautious, some financial institutions are willing to look past this. Bad credit history doesn’t always mean you can’t handle remortgage payments. Some lenders are able to consider these problems and still offer remortgaging services.

Independent financial advisors will be able to point you in the right direction. They will know which banks specialise in remortgages for people with bad credit.

Should I remortgage if I have bad credit?

Taking out a remortgaging offer can be beneficial for many reasons. However, it depends on your financial situation and why you are looking to remortgage. The main reasons people look for a remortgage deal include:

  • Moving to a better mortgage rate
  • To raise capital 
  • Debt consolidation
  • Releasing equity

As mortgage deals change all the time, your current agreement may not have the best interest rate. Looking at remortgaging can help reduce the overall payment you will have to make. You may want to make a large purchase or have a big event coming up. A remortgage can give you the extra money you need for this.

Debt consolidation remortgages are a very popular solution. People with multiple loans and credit card debt can benefit from moving everything onto a remortgage. Lower interest rates and paying the deficit over the term of the mortgage help regain control of finances. 

You may have equity in your home but don’t want to sell it to release the capital. Remortgaging can release the equity in your home, giving you access to that cash, without moving.

How to remortgage with bad credit

Not everyone has the same credit problems so your situation will need to be considered when looking at remortgaging. There may be a simple solution to get you a good deal, or other action may be required. Here are some simple steps to get you started:

Your credit report

A first step to getting a bad credit remortgage deal is to check your credit report. Credit reference agencies hold information on your debts and payment histories. The bank will use this to consider whether you will qualify for a remortgage.

By looking at your credit file, you can see what issues are on there. It is also vital to check it thoroughly. If there are any items on there in error, you can inform the credit reference agency. Cleaning up any issues or clearing debts can improve your credit score. Check out our 7 tips to improving your credit score.

FriendsCapital has partnered up with checkmyfile – the UK’s only multi-agency credit report – check your credit report.

Look at your options

While it may seem the best idea is to go to your current bank, this isn’t always advisable. High street banks and lenders tend to favour people with good credit. Remortgage applications with your bank may be more likely to be refused. There are several lenders and bad credit remortgage companies that will be more suitable for you. 

A bad credit loan is more of a specialist solution to debt management. Therefore you will want to use an expert advisor. They will have knowledge of the best lenders to approach and which application is more likely to be successful.

Know what you can afford

 It may seem obvious, but you will need to consider what you can afford. Depending on your income, your remortgage will have to be within your limits. Your financial situation should remain the same or get better with the new offer, so make sure you know what payments you can handle.

Lenders assess income differently, so a financial expert will be able to go through this with you. Generally, you will be able to get around 4x your income. Your fixed salary is usually only considered so overtime or bonus payments won’t form part of the calculation. Similarly, if you are self-employed, some lenders may not consider you for a remortgage. The advisor will be able to approach the right lender based on your situation.

Can I remortgage with a CCJ?

Yes, you can. If you have a CCJ, lenders will consider you to be an increased risk. A CCJ does not mean you will be refused a remortgage; however, it might mean you are not able to get the best rates. Friends Capital work with lenders who specialise in adverse credit; these lenders work with people who have a poor or bad credit history. Speaking to an independent advisor, like Friends Capital, is recommended.

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