Q&A with Caroline Thomas from Experian CreditExpert
Caroline Thomas, from Experian CreditExpert joined us in October 2012 to talk about credit ratings.
Caroline used her expertise to answer your questions on what affects your credit rating and how you can improve it, identity fraud, tips on how to manage your credit report and a whole range of other related topics.
Q. SoldierKatnissEverdeen: My ex-partner and I split two years ago. We co-own a house together which I live in and pay the mortgage on. He has now moved to another country but has not notified any of the relevant people that he no longer lives here. In the past I have had bailiffs looking for him for non payment of car tax etc.
I stopped contact between him and my daughter, he doesn't pay maintenance, mortgage or any related costs.
I am worried about the effect this may have on my credit rating. I have contacted some of the companies to say he no longer lives here but that can be fraught with them wanting his new address which I don't have and asking for him to write a letter stating that he no longer lives here.
Will the fact that we have a mortgage together connect our credit ratings and make mine look terrible? Is there anything I can do to protect my credit rating?
Q. TwoIfBySea: My ex-husband left over five years ago. Thanks to his debt being linked to mine I'll never have a good credit rating again. So what is the point, when I have never been tardy in payments or had a credit card or taken out a loan, but can be held financially to ransom by an ex-husband?
Q. skyebluesapphire: I'm currently divorcing my husband, and wonder if his credit rating will affect mine in the future? Obviously he has his own address now, but he will now have had three addresses in 12 months. He has business debts. I need to know that if they search under this address for his credit, that it won't affect my credit rating.
A. Caroline: If there is no longer any financial link between you and your ex-partner or husband, or the only remaining link is the mortgage and he/she hasn't been living at the address with you for six months or more, then Experian should be able to completely break the link between you on your credit reports. We call this a disassociation and you can actually request one from Experian online here.
Once you've done this, your credit rating will no longer be affected by financial records in your ex's name, as lenders will simply not see them when you apply for credit. A copy of your credit report will confirm whether any links exist at the moment - you will need to do this with all three credit reference agencies I'm afraid.
Q. Mybabyseyes: My credit rating is very good but I still can't get credit. I was refused a loan by three providers. I checked my credit report which is all clear. My husband has bad credit, does this affect me even if it is a single application?
A. Caroline: If you and your husband are financially linked – and a copy of your credit report will confirm this either way – then any applications you or he make as individuals can be affected by the other person's credit history. This is because your finances are identified as interconnected and any financial problems encountered by you or your husband are likely to affect the other.
It is possible to live together as a couple without joining up your finances of course. And if circumstances change, such as you closing any joint credit, you can ask us to update your credit report by removing the financial links.
Q. noidles: I'm getting to the point where my partner and I are trying to begin to save for a deposit on a house.
One of the credit rating issues I have is that I cancelled my O2 contract back in April. The last payment came out of my account and I then cancelled the direct debit when I saw it had left my account. For some reason the money was then taken back from O2 by my bank without me asking for my bank to do this. Without my knowledge my details were then passed on to a debt collection agency, and a mark was put on my credit file by O2 - I only owed about £15, which I then paid straight away when I realised the error.
I read that O2 can remove this marker as a goodwill gesture if you had been a loyal customer - I was with them for almost 15 years. They refused to do this, they said this wasn't ever possible.
I'm a little bit scared that this might happen; I don't want to lose out on getting a home because of £15. What can I do to remove this marker? Or is there anything I can do to improve my credit rating?
A. Caroline: If you made a reasonable attempt to pay the outstanding balance but were prevented from doing this by a banking issue, it certainly doesn't seem fair that your credit rating should now be affected by this. I suggest you order a copy of your credit report and then contact our Customer Support Centre explaining the circumstances and asking us to dispute the entry with the phone company on your behalf. We will relay this to them, ask them to investigate and then let you know once they respond.
If they agree to alter the entry on your credit report we will do this and send you a copy of the amended entry. If they stick to their guns and refuse to change it, we will explain your remaining options to you, such as adding your own side of the story to your credit report in the form of a notice of correction or, if necessary, escalating the matter to the appropriate ombudsman or regulator.
Q. notcitrus: Why can't I access my credit report, even an edited version, for a one-off look for a one-off charge? Why does a credit reference agency insist on getting people to sign up forever even though almost no-one wants to do that.
A. Caroline: The law gives you the right to obtain a one-off copy of your credit report for a fee of £2. You'll find a link to do this on our main website. You can choose to access this report online or have us send you a paper copy through the post.
Our credit report monitoring service CreditExpert is actually very popular, as it helps people to manage, protect and improve their score, but we very much support people having a choice of ways to check their data.
Q. artifarti : I tried to get a new mobile phone, on contract, last week at Carphone Warehouse but my credit check was refused and they suggested I look at Experian; I did this and found that my score was 999, Excellent, as I thought it would be. So why would I be refused on this basis? I haven't had a loan or used a credit card in the last six years - is it true that this puts some companies off? Also, will the fact that Carphone Warehouse refused me (for no apparent reason) now make my credit report worse? Thanks.
A. Caroline: Sorry to hear about your recent credit refusal. From what you say your Experian credit report is in great shape. It's unlikely you'd achieve a score of 999 without a decent track record of repaying credit on time. The scores that lenders calculate will factor in a wider selection of data, including the information you give them on your application form about your job and salary.
Each lender also has a slightly different view of what constitutes a creditworthy customer. I suggest you go back to the phone provider and ask them to give you a specific reason for saying no. If they have used credit scoring, then they are required to do this and you also have the right to ask them to review your application by a person. Even if they don't change their mind, you might get some useful advice on what you can do to increase your chances of getting a yes next time.
Q. soundevenfruity: Why does any application lower your credit score? Considering that there are more and more services that do credit searches including utility, phone companies, mortgage deals etc. Why do I need to ask them to do a quote search instead it being a default setting?
A. Caroline: A single credit application is very unlikely to affect your credit score. While it will leave a search footprint on your credit history, these records are not themselves negative. But if you then applied for lots of other credit agreements, the footprints would begin to stack up and this may then be a cause for concern. This is because a large number of credit applications over a short period can indicate financial difficulty or, sometimes, fraud. However, most lenders use credit scoring to weigh up all of the data available to them to work out the overall picture that it paints.
For a recent glut of search footprints to have a major impact on your score there would usually have to be other indicators of, for example, financial stress – such as heavily loaded credit cards. You should also bear in mind that scoring systems are frequently updated to reflect changing consumer behaviour.
As more organisations share customer records with the credit reference agencies and carry out credit checks, the number of credit applications that are seen as perfectly normal increases too. In terms of quote searches, if all you want is a price quote to help you decide where to place your application then certainly do ask for one of those. But once you do apply for credit, you should expect to find a factual record of that on your credit report.
Q. EIizaDay: I work in an HR dept and we regularly check candidates with Experian. I wanted to check my own record and was told that if I did so it would be a black mark against me.
I assume this is incorrect however I'd like to hear what you say about this rumour. Thank you.
A. Caroline: An employment check is not a credit check so the footprint left behind on your credit report would not be seen by other lenders and would not therefore affect your credit rating.
But be careful - by carrying out a search on yourself you may be breaking your company's policy and its contract with Experian. If you want a copy of your credit report you should order this through regular channels. You will actually find this much more useful anyway as only the reports we send to the public are fully comprehensive and actually identify the names of the lenders included on them.
Q. MmeLindor: We recently moved back to UK after 20 years of living abroad. We could not get: a credit card, a mortgage, a mobile phone contract. We were told; "You need to have credit to get credit" but that is impossible when no one will give you credit.
Why is it so difficult? Is there anything that we could have done to make the process easier? And have you any idea why our bank would give us a mortgage to buy a house but not a £100 overdraft?
Q. VintageRainBoots: We're American expats with perfect credit in the US. Experian is one of the big credit reporting agencies in the US and in the UK. Why can't our perfect US credit reports be transferred to the UK?
Q. exexpat : In my late 30s I returned to the UK after more than a decade overseas, with bank accounts (international banks) in good standing in the UK and overseas, and substantial assets, but was unable to get a credit card for three years and was turned down for a £10/month phone contract, because the 'computer says no'.
Surely there must be some way of exchanging credit information between international financial institutions in the 21st century?
A. Caroline: The questions above certainly highlight the value of building and maintaining a positive credit history – as well as how this can be a challenge for people starting from scratch, as statistically people with little or no credit history are more likely to miss credit payments.
Most lenders use credit scoring to assess new applications, and this is based on the statistical analysis of past customers. As a result, if the data available about you is similar to past customers who went on to miss payments, that lender's scoring system is likely to give you a low credit score. At the moment you usually need a high score to be offered credit, especially at competitive rates.
Quick wins to build up a credit history, and therefore your credit rating, include:
- registering on the electoral roll (if you're eligible)
- building up a relationship with a bank
- getting a low-tariff mobile phone contract
- getting a credit card aimed at people with low credit scores.
Once you've successfully collected a few records you should find more doors beginning to open. If you use Experian's CreditExpert service we will rate your current credit report to help you see how you're doing, and give you hints and tips to improve it. If you don't have a card (which you'd need to order a credit report online), you can apply for your report by post, with a cheque or postal order.
Q. onadifferentplanet: I would very much like to cancel my credit report, but it is impossible to get through on the phone and I can't even see my report anyway as when i try to log in it says my account is locked and I need to call. You do however manage to keep taking my money every month even though I have a new card with a different expiry date on it! How do I cancel?
A. Caroline: I'm sorry to hear you've had a problem accessing your report through CreditExpert and getting through to our contact centre. If you want to leave the service at any time you simply need to call our freephone cancellations hotline. We've also extended the opening hours of our call centre so you can call us to cancel on 0800 561 0083 anytime between 9am and 6pm Monday to Friday and also 9am and 1pm on Saturdays, and we have more call handlers now.
They should also be able to help you unlock your CreditExpert account so you can check your up-to-date Experian report. Banks and card providers often continue to honour a continuous payment authority (which is the term given to the agreement under which we collect monthly subscriptions) when customers' credit and debit cards routinely expire and are reissued. As a result, we urge customers who want to cancel their membership to contact us directly.
Q. Orangefan: I'm interested to know if you can ever repair a bad credit rating. I am with a debt management company and will be debt free in four years. Will I ever be considered a good credit risk again?
A. Caroline: I'm sure you will be considered a good credit risk again. Credit reports stretch back just six years, so adverse information will eventually disappear. Once your debt management plan ends check your credit report to make sure everything has been correctly updated.
Our CreditExpert service will also help you to identify opportunities to build up some positive information, which lenders do expect to see these days, perhaps by obtaining a credit card aimed at people with less-than-perfect credit ratings. If you repay the balance in full each month you'll avoid the interest charges and will begin to build up a helpful track record that will show future lenders you're a great bet.
Q. maybenow : I have always had a 'perfect' credit file. For various reasons - mainly due to my irregular (but healthy) freelance income - I don't have any household utilities paid from my account - they all go from my husband's. I have a credit card which I pay off in full every month, and a mobile phone but that's it. Is this going to be affecting my credit rating?
My husband and I are happy managing our money the way we do but we could if necessary open a joint account and move all the bill and direct debits to that - would that help my credit rating?
A. Caroline: A good solid credit history is a real asset, and you should certainly do what you can to make sure you have one supporting you. It sounds like your credit history should be in pretty good shape though. Ordering a copy of your report may surprise you, as so many organisations now share data through the credit reference agencies. So I would recommend you get an up-to-date report to see where you stand. If it is a little 'thin' you could then explore options to strengthen it.
A well-managed current account overdraft (which is the part of a current account you see on credit reports) may help, as might putting some of your utility agreements into joint names. But be aware that taking on joint credit, assuming you don't have any already, will link up your credit reports for future credit checks, although this is not problematic for most couples.
Q. FellowshipOfFestiveFellows : I had my identity stolen in 2001. I found out in 2008, after applying for a credit card. I have never had any form of credit at all. It took ages but finally was all sorted and a note was placed on my credit file.
However, I have still been unable to apply successfully for any form of credit, mobile phone, cards anything. I have been with my bank (NatWest) for over ten years and started with a junior account at that time. In April this year they changed the rules on these accounts that I can only use their cash points. So, I asked to upgrade, as did my DP. They turned me down flat due to my being a high risk. I asked if that was to do with my ID being stolen and was told yes.
Are banks and other agencies allowed to act this way to a customer?
A. Caroline: Credit reports only go back six years. As a result, there should not be anything on yours relating to a fraud that took place more than ten years ago. Having had your identity stolen in the past, our service will help to re-assure you as identity protection is a benefit of CreditExpert. We monitor the personal information within your credit report to make sure it isn't being used fraudulently, and alert you should there be an issue which needs your attention. You'll also be able to review the contents of your credit report to see what is currently recorded and how you might be able to improve it.
Once you're happy with your credit history you might want to consider applying for a current account with another bank, if your current provider can't provide the services you require. Unlike a new bank, your existing bank will have access to its own internal data about you, which may include information about events more than six years ago, and it can factor this into decisions about your account.