In other words, we're aware that the information held on our credit reports will affect whether or not we qualify for a credit card, mortgage or loan.
However, few people could tell you exactly what that information is, and fewer still know that credit reports are becoming increasingly detailed.
Yorkshire Water recently became the first water supplier to agree to share all payment details with credit reference agency Experian.
And now, Experian and the other credit reference agencies – Equifax and TransUnion – are seeking to secure deals with other utility and energy companies that can provide useful information about whether consumers pay on time.
So where will it all end? And just what details are included on your credit report?
Here, we reveal exactly what information is held on your credit report, and explain how you can find out what yours says about you.
What is included on your credit report?
Whichever credit reference agency a lender approaches for your credit report, it will contain details of any credit accounts in your name (from 1994 onwards), the date they were opened, the credit limit or amount, and whether you have missed any payments.
This includes closed accounts, which will remain on your credit report for six years, and records of any searches made because you applied for credit – whether or not the lender concerned accepted you as a customer.
Your name and date of birth will also be listed, along with your electoral roll details, address and the name of the bank or building society with which you have your current account. There will also be a section listing any financial connections to other people – for example, if you have a joint mortgage.
Should you have any County Court Judgments (CCJs), bankruptcies or house repossessions in your past, these will be recorded for the following six years.
Mobile phone contracts will be on there too, while water and energy companies may also already pass on details about your payment history if you miss or are late paying your bills more than three times.
Equifax, for example, receives information from Severn Trent about people who regularly default on their bills.
What is not on your credit report?
While the amount of information on credit reports is increasing, a lot of your personal details are not listed.
These include your religion, your political leanings, your medical history and your criminal record – if you have one.
Any savings accounts will also be ignored by the credit reference agencies, as will student loans taken out at university, for example.
And while it will be flagged if you have gone overdrawn without permission, other details relating to the day-to-day running of your current account are also absent.
Is more information on your credit report good or bad?
Many people are disturbed by the idea of organisations building up files of information on them. As such, a move towards greater information sharing is likely to worry rather than reassure them.
However, the credit reference agencies – and the companies that share customer details with them – argue that including more “positive” information on credit reports should help people to get credit more easily.
Including details of your savings accounts as well as your credit cards and loans, for example, could help to build a more balanced picture of your finances.
Graham Lund at TransUnion said: "We believe that there is potential for the sharing of account performance data from utilities companies to have a positive effect on a consumer's credit file.
“This could help to provide some people with better access to mainstream, lower-cost credit facilities and services.”
Yorkshire Water’s decision to share all of its payment data, and not just the details of those who regularly miss bill payments, is therefore being hailed as a positive step for its five million customers.
Paul Vescovi of Experian said: "As the vast majority of people pay their water bills on time, most Yorkshire Water customers will see their credit histories strengthened by this development, potentially giving their credit ratings a helpful boost.”
How can I get a copy of my credit report?
Obviously, the best way to find out exactly what is on your credit report is to see it for yourself.
The good news is that all of us have the statutory right to see our credit reports, and thanks to MoneySupermarket you can now exercise this right for free. Head over to our credit reporting channel to compare your different options.
You can, for example, get a free copy of your Experian credit report when you sign up for a 30-day trial of the company’s Credit Expert monitoring service.
You can cancel your contract once the free trial is up, or you can pay £14.99 a month to get unlimited access to your report, advice on how to improve your credit score so that you can qualify for more competitive deals. You will also receive weekly alerts of any changes to your credit report (often the first sign of fraud).
However, if £14.99 seems a bit steep, you can opt for givemecredit, which costs £6.95 per month (after a 30-day free trial).
It offers access to your credit report and details of your credit score and can also be cancelled at any time.
If you spot any mistakes on your credit report – for example, if it states you're financially linked to someone you no longer are - ask your lender or credit reference agency to put it right. If you have had credit in the past but missed payments due to illness or redundancy you can add a 200-word statement to your credit report to explain the situation. This is known as a 'Notice of Correction'.
For tips on improving your credit rating, read 'Five ways to boost your credit score.'
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