Life

My Big Mouth: If credit agencies are allowed to control our future, at least let us check ratings for free

By Ben Ireland

It is safe to say the average Joe on the street doesn’t know what their credit score is.

A recent MM poll found that 91% of Mancunians were unaware, and many didn’t know what it was.

One in every three credit card applications are turned down because of the applicant’s credit score.

These elusive numbers play a larger role in our lives than most people think and until someone has a problem resulting from it, they generally don’t know what factors contribute.

A number is assigned to all of us that helps dictate whether or not we are a ‘good’ customer to a bank, and assists a decision on a loan, credit card, mortgage or even mobile phone contract.

With credit harder to obtain than ever before, borrowers will certainly need to pay more attention to their credit rating and credit scores, but few even consider their score until it comes back to bite them.

Guy Anker, News Editor at Moneysavingexpert.co.uk, said: “People just don’t know enough.

“The banks could definitely do more to make people aware. Their call centre staff won’t even know the reasons why you’ve been turned down.

“It’s a very mysterious industry.”

Banks do consider more than just your credit score when determining if you are a safe bet. They will also take into account your income, savings, and even whether or not you’re registered on the electoral roll.

Experian Rental Exchange is set to make an appearance on our credit files in summer 2013, which will mean our rental history will contribute to our credit score.

Experts disagree who it will benefit – tenants or just their landlords.

James Jones, Experian’s Head of Consumer Affairs, said: “The idea is to provide a secure and compliant way for landlords to share rent payment data with each other, which will help them quickly identify reliable tenants.

“Tenants will also be able to provide consent to allow lenders to use their rent payment data to support credit scoring,” he added.

“As most tenants pay their rent on time, this should provide a welcome boost to their credit scores, particularly those who previously had short credit histories.”

This all sounds rosy in theory, and in a perfect world everyone would pay all their bills on time. The worry, however, is that people can miss one payment or make a solitary financial blunder and be stung for six years.

Mr Anker added: “It will be interesting to see if they treat rent in the same way as mortgages. I wouldn’t be surprised because it’s all in the housing sector.

“One late payment on your rent could potentially stop you getting a mortgage for six years.”

Mr Anker did stress, however, that each lender’s criteria are different, but since the recession hit, it has certainly been harder to obtain credit.

“GE Money said recently that they’re not going to accept people who have had a pay-day loan,” he added.

One of the most frustrating parts of the business is the lack of explanation. On rejection for a credit card, mortgage, loan or something as small as a retail loyalty card, we can be told we’re not suitable, but that is all the information we will ever receive.

So where are they getting the information from, and how do these people have the right to tell us that we aren’t allowed to know our own credit score?

The credit rating agencies, who charge us to tell us our own personal score, keep a tight grip on our information.

Many people will have seen the adverts that offer a free 30-day trial at said credit rating agencies, but once this trial expires, consumers are set up to pay a monthly fee of £14.99 to maintain the services.

They will certainly argue, however, that they offer more than just a credit rating. That said, the main pull of prominent advertising campaigns is that you can check your credit score for free.

What they fail to mention is that at any time in the future, if you wish to check again, you have to first cough up the sterling before you get your answers.

Call Credit, another of the leading agencies, are now offering a new service, Noddle, which allows people to check their credit file for free.

They will be making their profit through advertising instead of the monthly fees, which should hopefully make it easier for people to understand their credit score.

A Manchester resident, who wished to remain anonymous for fear of his name being associated with a bad credit score, had a dispute over a mobile phone contract payment. He won his arduous battle and didn’t pay.

Despite his victory, it was only three years later, after a few rejections for loans and credit cards that he decided to utilise Experian’s free trial and check his credit score.

What he found was that the default on the O2 contract was still on his file, and had been scuppering his chances of getting credit.

Our subject says he has never defaulted on a payment other than the one in question, and is now reliant on the word of the O2 complaints team that his credit issue is resolved.

He isn’t sure this has been resolved because he refused to pay the monthly fee Credit Expert charge to continue with their service after the 30 day free trial.

Picture courtesy of 401 (K) 2012, with thanks

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