70pc are too hard on themselves due to ‘lack of understanding’ of credit files

Posted by Jasmin Stopford in Credit Reports on 18 November 2016 - Jasmin is a Credit Analyst at checkmyfile

Research carried out by Just Mortgage Brokers shows that many consumers consider themselves worse off than they actually are, due to a lack of understanding of how a negative marker affects their credit file.

As a result of the research, 70% of the 500 people surveyed thought that “black marks” such as missed mortgage payments, CCJ’s and IVA’s are worse than they actually are.

With high street lenders carrying out more rigorous checks, many have often seen their applications declined. This only adds fuel to the fire as individuals feel even more pessimistic about their chances of being granted credit in the future, as they consider themselves to have “bad” or “adverse” credit due to being rejected.

As lenders are not legally obliged to say exactly why an application has been unsuccessful, declined applicants are effectively left in the dark with no idea as to what’s affecting their credit file, how long it will continue to do so and how they can improve their situation going forward.

The research finds that females have a better understanding of how long negative markers remain to be reported and males are consistently more pessimistic, but the issue remains that the feeling wouldn’t be as negative as it is if people had a clearer understanding.

65% of those surveyed thought that a missed mortgage payment is worse than it actually is, as 51% believed that it would never leave your credit file. Missed payments will only be removed from a credit report either six years from the date of the missed payment, or six years from the date of account closure, whichever is the later event.

Similarly, County Court Judgments are automatically removed once six years have elapsed from the date of issue, but 71% of those asked didn’t have any idea of how long it would remain on a credit file. An Individual Voluntary Arrangement stays on a credit file for six years, as long as it has been discharged, but 20% of respondents think that it remains for fifteen years from its start date. Further results of the research can be read here.

Many don’t realise that it is still possible to gain credit with such negative entries present on a credit file but as people’s perceptions are so far from reality, they’re put off. Take a look at the infographic that illustrates these results.

If you’re unsure whether you can get credit or not, our matched lenders service can give accurate predictions if based on your checkmyfile report. We match credit cards and personal loans to you based on your credit score. If you need any advice or wish to discuss your credit score and history, you can contact an expert credit analyst at checkmyfile on 0800 612 0421.

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