Have you been surprised to be turned down for a loan or a credit card?

It could be that you don't fit the lender's credit scoring criteria. Experian, one of the two credit reference agencies, Wants the guidelines in the "Guide to Credit Scoring 2000" to be applied more widely. Under these guidelines, lenders must tell an applicant the main reason why they were declined - but only if the applicant asks.

But companies also use the data from credit reference agencies. Banks, for instance, may not want to open accounts for people where these records reveal an "adverse credit history".

Sometimes the information is out of date. For instance, the electoral roll is only canvassed once a year so if you moved house in late 1999 your name might not have appeared on your credit file at your new address until spring 2001. However, local authorities now update their registers monthly and send updates to the credit reference agencies, so it's important to contact your local council when you move. If you think this might be the reason you have been rejected for credit you can take it up with the lender, which may change its decision.

But maybe there is something on your credit reference files that shouldn't be there.

What are these files? How can you inspect your record? And how can you challenge errors?

These are huge collections of information, including the electoral roll, information supplied by other lenders, and County Court Judgements (CCJ's).

Equifax's information includes some records of when you have fallen behind with payments, and how many cheques you have had bounced.

CCJ's will be recorded for six years from the date of the judgement - unless the judgement was paid in full within one month of judgement being given, when the court can remove the record if you contact them.

If a CCJ is paid after more than one month, it can be marked as 'Satisfied'.

When you apply for credit, a lender will use this information in its own credit scoring process.

In 1999 Experian, one of the two credit reference agencies, processed 80 million credit checks.

Start with Experian, because they have a clear and detailed guide here.

They are at

Consumer Help Service
Experian Limited
PO Box 8000
Nottingham
NG1 5GX

Write, giving you full name, date of birth, and current and previous addresses for the last six years, and enclose £2 cheque/PO. They send you the file within 7 days, plus an explanatory booklet.

I suggest you read the Experian link first because it is so helpful.

To get a copy of your Equifax record

• Write to
  Equifax
  Credit File Advice Centre
  PO Box 1140
  Bradford
  BD1 5US
  

• Enclose your full name and address plus any previous addresses over the last 6 years.

• Enclose a Cheque or Postal Order for £2 payable to Equifax Europe PLC.

You have the right to get mistakes corrected. You can also add explanatory notes where you feel there were special circumstances.

The Experian site explains your rights in more detail.

If a company has put incorrect and damaging information on your credit record, that can be libellous. The Information Commission say

There is a right to compensation under Section 13 of the Data protection Act 1998, if an individual can show he or she has suffered damage as a result of what someone in control of information has done with it.

See their useful leaflet No Credit.