If there’s a mistake on your credit file, you should get it put right as soon as you can, or you could find yourself financially penalised.
Mortgage lenders, banks and credit card providers are all scrutinising credit files more carefully than ever, so if there’s something wrong with your credit report – even if it’s through no fault of your own – it could hinder your chances of obtaining credit.
There are credit reference files on most adults in the UK. These store a variety of information that lenders and credit companies will take into account when working out whether or not you’re a good credit risk. Your credit file will tell them where you live now and have lived in the past, whether or not you’re on the electoral roll (which verifies that you are who you say you are) and how well you’ve managed credit and loans in the past.
The problem is that mistakes can occur and while the errors themselves may seem relatively minor, the effect on your ability to borrow may be dramatic. That’s why it’s vital that you get any errors corrected – and fast.
Correcting an error on your credit file
If you spot a simple mistake, such as an incorrect spelling of your name or address, contact the lender or credit reference agency and ask them to put it right.
If your credit file shows a more serious error, for example false information that you’ve been late with payments or that your account is in default (which means you’ve effectively broken the terms of the contract) when you haven’t, you can challenge this information.
Steps to take
There are several steps you’ll need to take if you want to correct an error on your credit report:
- Get in touch with the credit reference agency, telling what you think is wrong and why. There are three main credit scoring agencies in the UK – Experian, Equifax and TransUnion (formerly Callcredit).
- The credit reference agency will contact the bank or credit card provider etc. that has given them the incorrect information.
- It then has 28 days to correct the information, remove it from your file or do nothing. At the very least, the credit reference agency has to give you an update on how it’s dealing with your case.
- In the meantime, any information that you have told them is inaccurate, is marked as ‘disputed’ and prospective lenders are not allowed to rely on it when working out whether or not to give you credit.
If your credit report incorrectly links you to an ex
Credit reference agencies aren’t allowed to show information about other people who live with you on your credit file, but they are allowed to link your credit file to anyone you have a financial association with. That might mean your husband or partner if you have a joint bank account, loan or mortgage.
You’ll only be able to financially disassociate from an ex if you can show the following:
- That any joint loans or bank accounts that have an overdraft facility or the ability to borrow have been closed.
- Either you or your ex partner has taken over any accounts for services (such as telephone, gas, electricity and so on) that were previously in joint names.
- You have an independent income.
Once you’ve taken these steps, you can break the financial association by creating what’s known as a ‘notice of disassociation’. This is essentially a request to a credit reference agency to remove any financial link between you and your ex from your credit report.
Telling your side of the story
It may be that the information that appears on your file is correct, but doesn’t reflect the circumstances you were in when you missed your payments or got behind with your loan. If that’s the case, you can add a short 200-word statement called a ‘notice of correction’ explaining what happened.
Because lenders scrutinise credit reference files so closely, it’s well worth adding a notice of correction to your file if there’s a particular reason why you missed your payments. Keep the explanation as factual as possible, for example:
“In 2005 I started a business with my husband, having previously been employed for 10 years. Our marriage broke up in 2007 and I was unable to pay two credit card debts that had built up. I have now reached an arrangement to repay these debts and am back in full-time employment.”
Once you add a notice of correction, it does mean that any application for credit won’t be assessed automatically, but because it has to be read by a human, the decision about whether or not to grant you credit could take longer.
If you have a complaint
If you’ve got an issue with a credit reference agency not correcting an error when requested, the first step you need to take is to complain directly to the agency. Generally, any company that’s regulated by the FCA, will need to respond to your complaint in line with the following rules:
- Companies should investigate your complaint and give you a response within eight weeks.
- If it’s a complicated complaint that requires a lot of investigation they must contact you and tell you that they need extra time.
If you’ve complained about a mistake and it’s not being dealt with or you haven’t had the response you want, you can complain to the Financial Ombudsman Service which is a free complaints service that covers the whole of the financial services industry.
Learn more about making a complaint in our article How do I complain about a financial company?
A final thought…
As well as making sure your credit report is correct, you may also want to explore ways you might be able to give your score a boost. The better it is, the greater the likelihood that any credit applications you make will be accepted. You can find plenty of tips to help you get started in our article Seven steps to improve your credit score.
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