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Level 2: Intermediate

Credit reports and credit scores

7 min read · Before you start: Beginner lessons on debt and saving · Updated 1 November 2026

Key terms in this lesson: guarantor · credit report · credit score (all defined in the glossary)

When you ask for a loan, credit card or hire purchase, the lender wants to know one thing: will you repay? Your past behaviour is the best clue it has. That history is gathered in a credit report.

What a credit report is

A credit report is a record kept by a credit bureau, a company that collects repayment information from lenders. Banks, credit unions, finance companies and some shops send in details about accounts they have given you. The bureau puts them together and shares the report with lenders when you apply.

What is usually in it

• Who you are: name, address, date of birth and ID details, used to match records to you.
• Your accounts: loans, cards, overdrafts and hire purchase, with limits, balances and start dates.
• Payment history: whether you paid on time, late or not at all.
• Enquiries: a note each time a lender checks your report because you applied.
• Court judgments or defaults, where they are recorded.

Credit score

Some bureaus turn the report into a credit score, a number meant to show how risky you look as a borrower. A higher score generally means lower risk. Each lender decides its own rules, so the same report can lead to different answers from different lenders.

What helps and what hurts

Check your own report

1. Ask any lender which bureau it uses, then ask that bureau how to request a copy of your own report and what it charges.
2. Read every line. Look for accounts you do not recognise, wrong balances and payments marked late that you paid on time.
3. If something is wrong, write to the lender and the bureau, keep your proof (receipts, statements) and ask for the correction in writing.

Errors and fraud do happen. An account you never opened can be a sign that someone has used your identity.

Guarantor and joint accounts

If you guarantee someone else's loan, you are promising to repay it if they do not. If they miss payments, it can appear on your record and affect your own borrowing. People who act as guarantor are generally advised by lenders to treat the full amount as money they may have to find themselves.

How long information stays

A credit report is a rolling history rather than a snapshot. Accounts, balances and payment behaviour are reported periodically by lenders, and both good and bad entries remain visible for a period set by the bureau's own rules and by the law that applies to it. A missed payment from several years ago usually carries less weight than a recent one, but it does not vanish the moment it is settled. Equally, a long record of payments made on time is itself an asset, which is part of why closing an old account can work against someone.

The thin file problem

A particular difficulty for younger people and for anyone who has always paid cash is having no record at all. A lender looking at an empty file cannot see a history of repayment, so it has nothing to lend against except income and security. This is sometimes read as a clean record; to a lender it is an unknown one.

Ways a record commonly gets built from nothing include a small secured facility, a credit union loan taken against shareholding, a hire purchase agreement paid to term, or a credit card used for ordinary spending and cleared each month. What they have in common is that they create a repayment history the bureau can see. The pattern that builds a record is consistent repayment over time, which cannot be shortcut.

What lenders look at beyond the bureau

A credit report is one input. Local lenders typically also weigh:

• Income and its stability, usually evidenced by payslips or, for self-employed applicants, by statements and returns.
• Debt service ratio — what share of income already goes to existing repayments. Two applicants with identical reports can get different answers because one has more committed income than the other.
• Bank statements, which show the pattern behind the figures: regular salary, returned items, overdraft use.
• Security offered, and whether a guarantor is involved.
• Length of relationship with that institution.

Disputing an error

Errors occur, and so does identity misuse. The process that applies generally runs in this order: obtain the report, identify the specific entry and why it is wrong, write to both the lender that reported it and the bureau holding it, and keep copies of everything including the dated proof — receipts, statements, settlement letters. A dispute is usually investigated within a set period and the entry is corrected, confirmed or annotated. Nothing can be removed simply because it is unwelcome; only inaccurate information is correctable, and that is the reason firms promising to "repair" a credit record for a fee cannot do anything a person could not do themselves.

An account appearing on a report that was never opened is a different matter, because it may indicate that someone has used your identity. Our Scam Watch page covers the reporting steps.

Common mistakes

• Applying to many lenders at once. Each application can leave a mark.
• Ignoring a small unpaid bill. Small debts can still be reported.
• Closing your oldest account for no reason.
• Paying a company that promises to "repair" your credit for a fee. Only accurate, disputed information can be corrected, and you can ask for that yourself.

Test yourself

Mark this lesson as done

Not financial advice. This lesson is general education only. See our editorial policy and disclaimer.