In the current difficult lending environment, we thought it would be a good idea to speak to a credit agency for some insights on subjects such as the importance of maintaining a good file as a property investor / landlord; the ‘6 year rule’; expected lending practices in 2010; ‘tarnishes’ and improving your own rating to name a few. Here’s a short interview with Richard Catlin from ‘Checkmyfile‘.
First off, can you let readers know about what you do at ‘Check my File’ (for those that don’t know already)?
checkmyfile were the first company in the UK to give consumers online access to their credit files, and the first in the World to lift the lid on credit scores. We’re still the only place where consumers can view their credit reports based on data from all three credit reference agencies together – all presented in the same easy-to-understand format. Consumers can also check their credit scores, find out how their postcode is rated, assess whether they are vulnerable to identity theft, and get advice on dealing with debt – all completely for free. We also help consumers to turn the tables on lenders and find out who they are matched to based on their credit rating – vastly improving their chances of being accepted.
Most of our members are property investors and landlords – how important is it for them to keep an eye on their credit file?
A good credit rating really is an asset that you should look to protect. It’ll not only determine whether you are accepted for credit, but also the rate you’ll be asked to pay. Not only that, but for landlords in particular (with buy-to-let properties for example), it’s important to monitor your credit file for early warning signs of attempted identity theft. Credit files show all ‘linked’ address and so it’s a great way of checking you aren’t at risk.
Are there different kinds of credit ‘tarnishes’ (ie. some that can do more damage than others)?
It’s fair to say that some elements of credit files carry more weight than others. Some are obvious – bankruptcy for example – but people are often surprised at the impact less well known entries such as an “Arrangement to Pay” can have. When it comes to late payments, it often depends on how many ‘clean’ accounts are recorded on the file, and how long ago the payments were lodged. By checking your credit report online, you’ll be able to see which parts of your file give your score a boost and which might drag it down, and act accordingly.
Many people talk about the ‘6 year rule’ that if you default, on a credit card for example, that is the period it will take for your credit file to be cleared (and therefore for you to be more credit-worthy) – how accurate is this, particularly in the current climate?
Most credit account information does indeed remain on your file for six years from the date it is lodged, before being removed automatically. Similarly, most court information stays on your file for six years. Remember though, once adverse information is removed, your credit rating could improve dramatically overnight, and so it’s important to be aware of when that will happen and make sure that the rest of your file is as good as it can be.
If you had a CCJ against your name – does that mean that it would be impossible to get any kind of credit (secured or unsecured)?
It’s not impossible, even in the current market, but it will certainly restrict your borrowing options. Additionally, the practice of ‘rating for risk’ will mean that any lender who does approve your application is likely to charge a higher APR and may ask for a bigger deposit or security. Even if you’re aware that a CCJ is likely to show up on your file, it’s important to check that the ’status’ has been updated correctly, especially if you’re settled the debt.
At the moment, many investors are seeing lenders take a particularly strict view on all kinds of borrowing. For example, with mortgages, more of a deposit is required – from your point of view, are we likely to see a change in the near future (in 2010 for example)?
Whilst LTV ratio’s may improve slightly in 2010, lenders are likely to remain picky over who they lend to, and certainly over who qualifies for the best rates. Again, it’s likely to be consumers with the best credit ratings who get cherry picked for the best deals. Even in the recession, the housing market will follow seasonal trends, and so although we should expect a lull to be reported in the press in the next month or so (for the end of 2009), with any luck we’ll see another uplift in the Spring.
Do you have any tips for people who may have low credit ratings?
Check your credit report online so that you can diarise when any adverse information is likely to be removed. Make sure that any credit accounts you have open now are set up on Direct Debit to avoid late payments, and double check that you’re listed on the latest version of the Electoral Roll (the credit reference agencies are due to update their version of the 2010 register in the next few weeks).
Where can people get advice on improving their credit gaining ability?
We’d like to think we can help! Because we don’t have ties to any lenders, we can offer impartial advice about what you can do to improve your credit rating, and help on finding cheaper credit elsewhere.
The two main well known agencies for credit checking in the UK are ‘Experian’ and ‘Equifax’ – is there any way that borrowers can see which agency the lender they are approaching uses?
It’s important to remember that there are three credit reference agencies in the UK. Although Callcredit are the newest of the three, the credit reports we supply based on their data are actually the most in depth, and certainly worth checking alongside the other two. Picking lenders based on which agency they use is almost impossible. It’s much more practical to check for yourself what each agency holds about you, and then use your credit score to decide which lender you should apply to – more on that below.
We have been using Check-my-file for some time now and notice that you have a suggestions of unsecured loans and credit card companies that people should apply for – how accurate and reliable is this system?
The scorecard that we use to generate credit scores and match consumers to lenders is based on the same principles as the version that lenders themselves use to make decisions, and so is a very powerful tool. By using your credit rating in this way, you’re able to turn the tables on lenders, increasing the chances of them saying “yes” considerably.
Please provide us with some information about what you offer at ‘Check My File’ and how our members can tap into your service?
In-depth, but easy-to-understand credit reports with great customer support have always been our aim. Obviously, we hope that everyone finds their credit rating to be excellent, but when people do need that extra bit of advice, we’re here to help.
1) First off, can you let readers know about what you do at ‘Checkmyfile’ (for those that don’t know already)?
‘Checkmyfile’ were the first company in the UK to give consumers online access to their credit files and the first in the World to lift the lid on credit scores. We’re still the only place where consumers can view their credit reports based on data from all three credit reference agencies together – all presented in the same easy-to-understand format. Consumers can also check their credit scores; find out how their postcode is rated; assess whether they are vulnerable to identity theft; and get advice on dealing with debt – all completely for free. We also help consumers to turn the tables on lenders and find out who they are matched to based on their credit rating – vastly improving their chances of being accepted.
2) How important is it for property investors and landlords to keep an eye on their credit file?
A good credit rating really is an asset that you should look to protect. It’ll not only determine whether you are accepted for credit, but also the rate you’ll be asked to pay. Not only that, but for landlords in particular (with buy-to-let properties for example), it’s important to monitor your credit file for early warning signs of attempted identity theft. Credit files show all ‘linked’ address and so it’s a great way of checking you aren’t at risk. Landlords can also use our services to verify potential tenants for their properties.
3) Are there different kinds of credit ‘tarnishes’ (ie. some that can do more damage than others)?
It’s fair to say that some elements of credit files carry more weight than others. Some are obvious – bankruptcy for example – but people are often surprised at the impact less well known entries such as an “Arrangement to Pay” can have. When it comes to late payments, it often depends on how many ‘clean’ accounts are recorded on the file, and how long ago the payments were lodged. By checking your credit report online, you’ll be able to see which parts of your file give your score a boost and which might drag it down and act accordingly.
4) Many people talk about the ‘6 year rule’ that if you default, on a credit card for example, that is the period it will take for your credit file to be cleared (and therefore for you to be more credit-worthy) – how accurate is this, particularly in the current climate?
Most credit account information does indeed remain on your file for six years from the date it is lodged, before being removed automatically. Similarly, most court information stays on your file for six years. Remember though, once adverse information is removed, your credit rating could improve dramatically overnight, and so it’s important to be aware of when that will happen and make sure that the rest of your file is as good as it can be.
6) If you had a CCJ against your name – does that mean that it would be impossible to get any kind of credit (secured or unsecured)?
It’s not impossible, even in the current market, but it will certainly restrict your borrowing options. Additionally, the practice of ‘rating for risk’ will mean that any lender who does approve your application is likely to charge a higher APR and may ask for a bigger deposit or security. Even if you’re aware that a CCJ is likely to show up on your file, it’s important to check that the ’status’ has been updated correctly, especially if you’ve settled the debt.
7) At the moment, many investors are seeing lenders take a particularly strict view on all kinds of borrowing. For example, with mortgages, more of a deposit is required – from your point of view, are we likely to see a change in the near future (in 2010 for example)?
Whilst LTV ratios may improve slightly in 2010, lenders are likely to remain picky over who they lend to and certainly over who qualifies for the best rates. Again, it’s likely to be consumers with the best credit ratings who get cherry picked for the best deals. Even in the recession, the housing market will follow seasonal trends and so, although we should expect a lull to be reported in the press in the next month or so (for the end of 2009), with any luck we’ll see another uplift in the Spring.
8)Do you have any tips for people who may have low credit ratings?
Check your credit report online so that you can diarise when any adverse information is likely to be removed. Make sure that any credit accounts you have open now are set up on Direct Debit to avoid late payments, and double check that you’re listed on the latest version of the Electoral Roll (the credit reference agencies are due to update their version of the 2010 register in the next few weeks).
9) Where can people get advice on improving their credit gaining ability?
We’d like to think we can help! Because we don’t have ties to any lenders, we can offer impartial advice about what you can do to improve your credit rating, and help on finding cheaper credit elsewhere.
10) The three main well known agencies for credit checking in the UK are ‘Experian’ and ‘Equifax’ and ‘Call Credit’ – is there any way that borrowers can see which agency the lender they are approaching uses?
Picking lenders based on which agency they use is almost impossible. It’s much more practical to check for yourself what each agency holds about you, and then use your credit score to decide which lender you should apply to – more on that below.
11) We have been using ‘checkmyfile’ for some time now and notice that you have a suggestions of unsecured loans and credit card companies that people should apply for – how accurate and reliable is this system?
The scorecard that we use to generate credit scores and match consumers to lenders is based on the same principles as the version that lenders themselves use to make decisions, and so is a very powerful tool. By using your credit rating in this way, you’re able to turn the tables on lenders, increasing the chances of them saying “yes” considerably.
12) Please provide us with some information about what you offer at ‘Check My File’ and how our members can tap into your service?
In-depth, but easy-to-understand credit reports with great customer support have always been our aim. Obviously, we hope that everyone finds their credit rating to be excellent, but when people do need that extra bit of advice, we’re here to help.
Please click here to head straight to the ‘Checkmyfile’ website.
