There can be many mysteries as to what is and what is NOT on your credit file and credit history. These components of what is on your credit files is what makes up your credit score.
Credit scores can be thought of in this way:
High credit score = good
Low credit score = bad
It is not a complicated formula, but does take in a few factors, and adds a percentage to those factors of what is used to create your credit score:
* Payment history 35%: This is how we pay our accounts, pay them late, in arrears or have defaults, and your credit score will drop.
* Balances you owe 30%: This is how much you owe, if you owe a lot and have high balances, your credit score will be reduced.
* How long you have had credit 15%: The longer you have had credit granted to you, the better it improves your credit score.
* Types of accounts you have 10%: Certain types of credit accounts better your credit score. A mortgage loan is better than catalogue credit.
* How often you apply for new credit 10%: The more you apply for credit, the more inquiries or footprints are made on your credit files. Too many of these footprints in a short period of time, reduces your credit score.
The Credit Bureaus
So who gathers all this information and data to create a credit report/history, the credit bureaus.
Here in the UK we have three (3) credit bureaus:
* Call Credit now Transunion
Think of the credit bureaus as these huge containers of data, data based on what makes up your credit score.
All your accounts, how they are/were paid, balances, who looks at your credit history, dates for when accounts ere opened, closed, and paid.
A warehouse of data.
And who reports all this data to the credit bureaus, banks, lenders, insurers, anyone who has information on you. But not just any information, information on your finances, and how you pay these accounts.
This may sound like a lot of information, but compared to Social Scoring, it is a drop in the bucket.
Social Scoring or Social Credit, not only takes into account how you pay your accounts and bills, but also your social media, who you are friends with, what you purchase, how you travel, where you travel, your digital footprints, and much more, all go into creating a social score.
However, while social scoring is the future, the future is not here just yet, at least not in the free world.
Do with all that goes into your credit history and credit report, what is NOT on your credit file?
Job History: Oddly enough your job, and your work or job history is not on your credit file. There is no way for a lender to know you are working or not except to request wage statements, and do a full income and expenditure form.
The I&E is to take into account all household income, and also all bills.
Wages: Your credit file as it does not show your job or work, does not also show your wages. It also does not show any benefits you may be receiving either. So once again, lenders rely onI&Es and statements you can provide.
Savings: Your savings and banking details are also NOT on your credit history. You may have £1,000,000 in the bank, but it will not be shown on your credit history.
Spouse: Your partner or spouse, and their accounts, unless they are joint accounts in both your names, will not be shown on your credit history.
Everyone has their own credit file. The only time someone else’s account may show on your credit is if it is a joint account, or you are a co-signer.
Accounts not reported: Not all bank and lenders report to all 3 credit bureaus. And some small lenders, do not report to any credit bureaus at all. So if a lender does not report an account to a credit bureau, it will not show up.
Rent: Unless your landlord reports to the Rental Exchange, your rent is not reported to the credit bureaus.
This does not mean if you default on your rent your landlord may not seek out a judgment against you which can be reported to the credit bureaus.
So while there is a vast amount of information and detail about us on our credit files, there also are a few pieces missing.