If you are applying for credit, there’s usually a form to fill in. Lenders will look at this information when they are deciding whether or not to lend you money, so it’s important to take your time and give them the best first impression possible, without lying of course. Many banks and building societies use not only credit scoring agencies but fraud agencies too, which use software to pick up discrepancies on forms which could indicate identity theft or fraud. Check the form over for typos – have you included your postcode and given your annual not monthly salary, for example?

It’s a common misconception that the bank knows everything about us and can see the details of every account we have but this isn’t really the case. If you are applying for a loan or credit card with a specific lender, they will be able to access:

• Your track record with that lender – they will be able to access their own account data about you, showing if you have made payments on time in the past.
• Fraud information – companies in the financial services industry share information between themselves about customers making fraudulent applications.

Credit Referencing Agencies

The three big credit reference agencies in the UK are Experian Equifax, and TransUnion. All lenders will use at least one, possibly more than one. Agencies compile information from the electoral roll, and will look at court records to see who has been declared bankrupt or been given judgements against them.

Agencies can also access data from other lenders, showing whether you have applied for credit through other lenders, and showing who you might be linked to financially through having a joint account, for example. They also have information from gas and electricity bill, so being in arrears with your energy provider could go against you too. Credit referencing is a huge factor in whether you will be successful when applying for the loan or not. Credit referencing agencies just collate the information given to them and pass it on to the lenders; they don’t make decisions. Agencies handle a huge volume of information and sometimes get things wrong. If you’ve been turned down and can’t understand why, the first step is to request your file from the agency to check it over for any mistakes.

What Lenders Don’t Know About You

There are lots of myths around about what sort of information is actually on your credit file. It’s important to bear in mind that your credit file is purely your financial history and nothing more. Despite the conspiracy theories which you might hear or read about online, credit referencing agencies and lenders do not know:

• Your religion, race or ethnic background – because these facts about you are not recorded on your credit file.
• How much you earn – credit agencies don’t have access to HMRC, and can’t see how much you’re earning or paying in tax. You might be asked to state your salary on an application form though, especially for a mortgage or similar.
• Savings – although a financial product, details about money you hold in savings accounts won’t appear on a credit referencing report because you’re not borrowing anything. If you do apply for a new savings account, there will still be checks done to establish your identity to comply with money laundering law.
• Medical information – credit referencing agencies won’t have any access to your medical records, or details of any tests you are waiting to have.
• Criminal records – no credit referencing agency will have any information about any crimes you have committed in the past, unless of course, those crimes involved making fraudulent insurance claims or identity theft to apply for credit cards in someone else’s name.