What is a credit record?

You credit record or credit report contains the history of how you manage your personal finances, especially your debts, and monthly bills. Among the things it includes are:

  • Personal details like your date of birth, address and previous addresses

  • All your active credit agreements, and closed agreements from the past six years

  • Transaction history for each account including, what you owe and any missed payments

  • Any defaults, county court judgements or bankruptcy notices

  • Any active debt management plans or individual voluntary arrangements

What's the difference between a credit report and a credit score?

A credit report is a file containing information about your credit history. Your credit score is a score given to you by a Credit Reference Agency (CRA), which tells you how your credit report will look to lenders - the higher the score, the better it looks.

What information is not included in your credit report?

Although a credit report contains sensitive and personal information about your personal finances, it does not include details like:

  • Current account information (unless you have an overdraft)

  • Savings account information

  • Your salary

  • Student loans

  • Criminal record

  • Medical history

  • Parking or driving fines

  • Council tax arrears

  • Information about gender or ethnicity

How does your credit record affect your loan application?

When you apply for a loan, the bank and loan provider will take a look at your credit history to decide what interest rate to offer you. The provider will also ask you for your income and your existing financial commitments.

If you're applying for a joint loan, they will check the same details of the person you are applying with.

Banks do this to assess how much of a risk you'd be as a borrower, which will determine the interest you are offered.

Does your credit history affect the cost?

Lenders usually use your credit record to work out how risky it is to lend to you and what interest rate to offer you on a loan. This is called risk based pricing.

When lenders advertise their loans they show a representative APR (annual percentage rate), which they only have to offer to 51% of borrowers. These rates are typically offered to borrowers with the strongest credit record.

If you have a history of missed payments or CCJs, you are deemed to be a high-risk borrower, so you are likely to be offered a higher interest rate if approved for a loan.

What happens if you apply with bad credit?

Just because you have bad credit doesn't always mean that you can't get a loan. It can mean that you'll likely be offered a higher interest rate. You may also be offered a smaller loan than what you were looking for. Read more about getting a loan if you have bad credit.

Before you apply for a loan

The first thing you should do before you apply for a loan is to check your credit history.

This is to ensure that there are no mistakes on your record. For example, old accounts that should be closed being listed as still active, or incorrect personal details like your address.

If you are worried that poor credit could stop you from being accepted for a loan you could look into bad credit alternatives. Or you could take some time to improve your credit rating and apply for a loan at a later time.