No one has a right to be awarded credit.  Most lenders will decide whether or not to lend someone money by credit scoring.  This means awarding points based on the information that you supply in your application.  The lender is basically deciding whether it is an acceptable risk to lend money to you.  If you do not meet the required number of points then you might be refused credit, or you could be charged a higher APR.  There are ways in which you can improve your credit rating.

Most lenders check information held by a Credit Reference Agency.  These agencies keep information about how good (or bad) people are at handling money.  This is known as a credit file and includes:

• address and electoral roll information.  You will get more points if you have not moved address much and have been on the electoral roll at each address that you supply.
• court orders for not paying debts.  These are usually County Court Judgements and stay on file for 6 years.
• past credit history, showing details of how credit has been managed, whether good or bad.  If you have defaulted on any previous credit agreements then this will also be held on file for 6 years.
• details of recent credit applications.
• details of any bankruptcies.

Everybody has a right to see the information in their credit file.  If you have been refused credit, or if you are just curious to see what is being held on your file then contact Experian, Equifax or Callcredit.  You can now access your report online but you may have to pay a small amount. These websites are also a good source of reference if you want to find out more about how credit works.

Correcting your credit file

If you do not agree with any of the information on your file then you can ask for it to be corrected by writing to the credit reference agencies, providing evidence if possible, and asking for the incorrect information to be removed.  It is also possible to ask for a Notice of Correction to be put on your file which allows you to explain individual entries on your report.

Credit Repair Companies who offer to clean up your file for a fee should be avoided.  Any changes that need to be made to your file can be done by yourself, and if you need help you should contact the Student Advice Service, your local CAB or National Debtline. 

Responsible use of credit

The system of credit scoring and the use of credit reference agencies by most lenders in the UK means that if you have a poor history of using credit then this can make it very hard for you to borrow money in the future.  This may not be a big problem for you in the short term, but could have serious consequences later in your life when you want to take out a mortgage or loan to buy a car, for example.  It is very important to use credit sensibly so that you don't create obstacles to being where you want to be later in life.