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This blunder will ruin your credit rating

Donna Ferguson
by Lovemoney Staff Donna Ferguson on 10 September 2010  |  Comments 7 comments

If your bank makes this mistake and you don't know about it, you could find yourself in a lot of trouble.

This blunder will ruin your credit rating

Fans of Sesame Street's Big Bird will know: Everyone makes mistakes.

Of course, it's all very well for a man in a giant yellow chicken outfit to preach: "Don't get mad and don't get sad... mistakes are not so bad".

But if it's your bank which has made the mistake - and that mistake has a detrimental impact on your credit rating - it could cost you thousands of pounds.

This is because, as I explained in The secret way that banks keep tabs on you, banks regularly share information about you and your credit record behind your back.

And nowadays, after the credit crunch, some mortgage lenders and credit card providers will reject applications for credit because the applicant has a single black mark on their credit record.

So a single mistake by the bank (which may have occurred for a number of innocent reasons: because you were a victim of identity fraud, or an application was accidentally submitted twice) could potentially harm your ability to get a mortgage or any other form of credit in the future.

And the worst part is, most lenders won't tell you their reasons for turning you down.

That means a mistake could be sitting there on your file, right now, just waiting to cause havoc the next time you apply for credit.

Scary thought, isn't it?

Check your credit report

In this uncertain economic environment, when a spotless credit rating is so important, it is a really good idea to check your credit report just to make sure everything is as it should be.

You could either buy a report from Equifax Credit Rating for £14.95, or you can sign up for a 30-day free trial with Experian through lovemoney.com (this will allow you to access your report for free - but if you don't want to pay a monthly subscription charge, remember to cancel before the 30-day trial is over).

Alternatively, you can get your credit report for £2 from Equifax, CallCredit and Experian. This report will show your address history, accounts you have open and any court judgments made against you. If you think you will forget to cancel the trial or you don't need unlimited access to your report, this is definitely the better option.

Correct your credit report

If you do find there is a mistake on your report, there are a number of ways you can correct the error:

  1. You can complain to your lender. Every lender should have a complaints procedure in place that will allow you to do this. Once you have done this, you will then have recourse to the Financial Ombudsman Service if it isn't sorted out. However, you have to wait until the bank has sent you a letter with its final response to your complaint, or 8 weeks have passed with no response.
  2. You can contact a credit reference agency and ask them to contact the bank on your behalf and query the mistake.
  3. You can add a 200-word statement to the credit report and explain the truth. This is called a ‘Notice of Correction'. You will need to contact a credit reference agency with the statement and ask them to put it in your report. This should cause any application you make to be referred by an automated computer check and passed on to a real live human being, who should be more sympathetic than a machine!

Best of all, you can do all of the above simultaneously if you want to.

In other words, if you see a mistake, don't let them get away with it! Get mad - and get it corrected!

More10 astonishing lies about credit ratings

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Comments (7)

  • Donna Ferguson
    Love rating 130
    Donna Ferguson said

    These are all really fair comments and I feel terrible that I forgot to put that option in. It was an honest mistake but not one that I should have made. I'm very sorry. I've added it to the article with links to all three places you can go to get the statutory report. Hope this is helpful and thanks again for bringing this to my attention.

    Report on 11 September 2010  |  Love thisLove  0 loves
  • subaruchick99
    Love rating 10
    subaruchick99 said

    Last year I cancelled my monthly subscription to Experian having had it for a year and seen nothing untoward all year. It seems immediately after I cancelled it 10 footprint searches were recorded by them "generic searches from HSBC" which were nothing to do with me - moving my rating from good to poor. I am more than a little suspicious at the timing of it - as it more or less started immediately I cancel my subscription. Not to mention that if it was not a coincidence I am most unhappy that something listed as a "generic" search could be repeatedly undertaken without them having an obligation to contact me. The only reason I even found out was I am currently applying for a mortgage

    Report on 12 September 2010  |  Love thisLove  0 loves

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