The costly credit report blunder that meant I was rejected

Rejected for credit for the first time in years, Cliff D'Arcy turned to his credit report. And was horrified at what he saw...

Almost all of us have a credit record. This electronic file - created by a credit reference agency - chronicles your credit history, keeping track of your debts, repayments and household bills.

When you pay bills or make debt repayments on time, this positive information gets recorded in your credit history. Likewise, if you pay late, miss payments or default on a debt, then this negative info dutifully goes in your file.

Positive information helps to improve your creditworthiness, lifting your credit score. The higher your credit score, the easier you will find it to borrow. On the other hand, if you have a low credit score (or have gone bankrupt, insolvent or defaulted on a debt), then getting credit may be virtually impossible.

Give me credit

Clearly, having a correct and up-to-date credit record is a must, particularly when planning a major purchase on credit, such as arranging a mortgage to buy a house or applying for a car loan or credit card.

Britain has three major credit reference agencies (CRAs): Experian, Equifax and Callcredit. These firms store slightly different credit records for each individual, plus each company uses its own in-house algorithm to calculate personal credit scores. However, these three CRAs all have one thing in common: they wield immense power over us.

Take, for example, the uncomfortable situation when your credit file contains a major mistake - a real howler, such as incorrect personal data. In the event that there are discrepancies between your credit file and a credit application, the chances are that you will be turned down flat right away.

Although lenders themselves make the final decisions whether to grant or decline credit, their hands are guided by the CRAs. When CRAs slip up, people's lives can quickly get messed up, too. In the worst-case scenario, a defective credit file could mean being denied a mortgage, loan, credit card - or even a simple contract for broadband or a mobile phone.

Not at this address

Recently, I was turned down for a credit card for the first time in what must be at least 15 years. Over this long period, I have used credit sensibly, paying all my bills and credit repayments on time and in good order. With such a strong credit history, I was more than a little surprised at this recent rejection.

What's more, my wife is looking to buy a new home in the coming months, so I need to be absolutely sure that my own credit record is spick and span. SO I went online to check my credit files, starting with Equifax.

The first thing I noticed is how lenders love mis-spelling my surname. The correct spelling is "D'Arcy", but lenders' systems never cope well with apostrophes, so tend to record my family name as "Darcy". Though my date of birth was correct, my email address was out of date, so I corrected it online.

I then spotted something horrendous: a blunder so big that it would make applying for credit almost impossible. Equifax lists my current address as one in London that I left in 2007. Since then, I have moved three times: once to an address in the same street, then relocation to Hampshire in 2008, followed by a local move in 2011.

In other words, I have moved three times since 2007, yet one of the UK's two biggest credit reference agencies wrongly believes that I inhabit a property that I left seven years ago.

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Review your personal information

To keep your credit record in tip-top shape, certain vital data must be correct and accurate. Otherwise, trouble will surely follow. When checking your credit file, make absolutely sure that these five key personal details are correct:

1. Your full name (spelled correctly)

2. Your date of birth

3. Your home address

4. Your home telephone number

5. Your electoral roll details (as provided by your local authority)

At the very least, mistakes in these five datasets could make applying for credit tricky. At worst, they could completely prevent you from obtaining credit and other goods and services.

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Keep an eye on credit agreements

As well as occasionally checking to ensure your personal details are correct, you should cast an eye over your credit agreements every now and then. You can do this by applying for your credit report online, for which CRAs usually charge under £6. However, a paper record costs just £2 per CRA and usually arrives within a week or two.

Once you have your credit report, check back over your history to make sure that any and all data recorded against each credit agreement is correct. If not, you have a right to correct these records (see below).

At the same time, check your court information to make certain that you don't have any County Court Judgments (CCJs) wrongly recorded against your name. A CCJ makes applying for credit all but impossible, so you need to act immediately if one has mistakenly surfaced in your credit record.

Notice of Correction

Of all the 'big data' held by CRAs, only a tiny fraction is generated by these firms themselves. The vast majority comes from UK lenders (banks, building societies and other credit providers), official sources (the courts and electoral rolls), and suppliers of household services such as broadband, phones and utilities.

That said, when companies provide incorrect data to CRAs (and mistakes are sometimes made), you have a legal right to correct your credit file to reflect reality. You can do this by issuing an official 'Notice of Correction' to each CRA, pointing out the flaws in your file and asking for these to be corrected. In effect, correcting any mistakes can mean issuing three Notices of Correction, making this a somewhat tedious and tiresome task.

But you should never automatically assume that your credit files are perfect. One survey from consumer champions Which? found that 12.5% of us had discovered errors in credit files in the past. 

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More on credit:

The importance of getting your name on the electoral roll

What REALLY damages your credit rating

How to repair your credit rating in 2014