All you need to know about online credit checks


Unless you’re a millionaire, whenever you make large purchases, notably for a house or car, you will need credit. Few of us have enough money laying in wait in the bank to buy a brand new car, let alone a house, outright; we need a loan to buy these things. And to get a loan, our credit history is given a thorough once over. Every time you apply for a loan or credit it is noted on your credit history. Too many applications and you risk looking dodgy, fraudulent or in financial trouble. Whatever conclusion is drawn, chances are you will be offered a highly unattractive interest rate of will be refused the loan or credit outright.

But few of us actually know what our credit history looks like. You can get a free online credit check from sites such as Credit Expert and finally get to see what financial institutions see. But before you get this free online credit check, you need to know exactly what a credit report looks like and how you should interpret it.

What is a credit report?

A credit report is basically your financial history. It is made up from two main sources. The first comes from public records, such as electoral roll information, court judgements, individual voluntary arrangements and bankruptcies. The second is based on financial information from banks, credit accounts, credit applications and financial associations.

What is a credit rating?

Once all the relevant information has been gathered, financial institutions will give you a credit rating. This is based on your financial history; things such as unpaid loans, late payments and even the size of the loans themselves will affect your credit history. You shouldn’t be afraid of your credit rating as it can be both good and bad, furthermore, there are things you can do to change it. The rating is there to help lenders lend profitably, but also responsibly.

What influence does a credit rating have?

Your credit rating, whether good or bad, will determine whether you get a loan, mortgage or credit; it will dictate whether you are included or excluded from certain offers and promotions as well as services and products. It can also affect employment prospects and whether you get a roof over your head.

Why should you have a credit rating check?

Everyone should take a healthy interest in their credit rating as a good rating can give you access to the lowest interest rates and best financial promotions. However, a poor credit rating can have devastating effects and mean you might not be able to get the home of your dreams. If you can get a free online credit check, you haven’t got anything to loose so you might as well give it a go.

Your credit rating is constantly updated in accordance with your changing financial situations, so it’s important to keep on top of these changes so if any problems arise you can deal with them before they become credit barriers.

Finally, and perhaps more importantly, ID theft is becoming increasingly common and costs the UK £2.7 billion. However, it takes the average Brit 15 months to discover their identity has been stolen. A credit check can quickly reveal the truth and allow you to do something about it. Get more information on identity theft and how to protect yourself from it from Crime Stoppers.

Mandatory Bank Accounts for 16 Year Olds?

The Government is facing calls to help youngsters better understand their finances by giving all 16 year olds a bank account.

The scheme would work by giving 16 year olds a bank account when they receive their National Insurance number, said Simon Culhane, chief executive of the Chartered Institute for Securities & Investment (CISI).

Making personal finance a more important part of the national curriculum has also been urged.

A system whereby a 16 year old only has to complete one form to decide which bank they would like to join has been raised.

Mr Culhane said the initiative would help children understand personal finance at a much younger age, especially as online payments and transfers become more popular.

At The Financial Fairy Tales we applaud the encouragement for young people to open bank accounts and a simplification of the account opening process which can be daunting to many youngsters. Making something mandatory however makes us more uneasy. After all you can lead a horse to water but you cannot make it drink. In other words forcing youngsters to open accounts will not automatically lead to their use or an improvement in financial literacy.

The suggestion comes after last month’s debate in the House of Commons about making finance lessons a bigger part of children’s learning – a proposal which garnered support from all parties.

There are worries that children are not being suitably prepared to deal with their finances.

Within families, about 19% of parents have never discussed with their teenagers how to spend money and 32% have yet to talk about how to budget, or even describe what one is, while only 36% of people understand that the term APR relates to interest payments.

Currently, aspects of personal finance are covered in the personal, social health and education module taught in schools, but there are no exams to take.

The CISI says the current system does not go far enough and is ‘almost universally derided by pupils and teachers alike’.

There have been movements towards making financial education part of the national curriculum in England and Wales from the next review. However we would urge that it is not buried in a Maths curriculum which is already failing many young people but rather integrated into life skills and PSHE sessions to draw upon the skills and experience from other subject areas.