When applying for credit, most lenders will use the information held on your Credit Reports with the Credit Reference Agencies (CRAs) to determine whether they will be willing to lend to you. Any information obtained from the CRAs can then be used as part of the lender’s evaluation of your creditworthiness.
As such, it’s vital to ensure you are aware of how long information is reported by the CRAs to ensure there are no nasty surprises when a lender processes your application.
Why is information held for as long as it is?
While an account is shown on your Credit Report, the last six years of repayment history can be reported. If the account’s closed, repayment history from six years prior to the closure date will be shown.
Under normal circumstances, closed accounts are automatically removed by the CRAs after six years from the date of closure. This includes any negative information such as missed payments or arrears. In contrast, any accounts that are reported as being open will continue to feature on your Credit Report indefinitely, with a ‘rolling’ six-year history.
All Credit Reference Agencies that operate in the UK act in accordance with the Data Protection Act, which ensures that no data is held for longer than it needs to be by any party. That is why open accounts are reported indefinitely, whereas information on closed accounts is only kept for six years.
How long are defaults recorded
Defaulted accounts are reported slightly differently; when an account defaults, the lender is no longer obliged to send updates to the Credit Reference Agencies to show if you have been paying your debt, or even if the account is considered open or closed.
Any payments towards your debts may also be reflected on a separate account with a debt collection agency. Whilst this won’t prolong the amount of time the default is held on your Credit Report, the ‘new’ account may be reported independently. Additionally, any unpaid debt could be subsequently subject to a County Court Judgment. Regardless of a subsequent CCJ, any defaulted accounts are removed after six years from the date of default, even if the balance for the original account has not been settled.
One difficulty with defaulted accounts regularly stems from when a CCJ is issued. Like defaulted accounts, CCJs are reported for six years from date of issue and can severely hinder your Credit Score whilst they remain reported by the Credit Reference Agencies.
Contrary to popular belief, even if your debt becomes statute barred in this time, it may not be written off.
Court records
Other forms of court action may also appear on your Credit Report, namely forms of insolvency such as bankruptcies and IVAs. Bankruptcies (Sequestrations in Scotland) are typically discharged after a year but remain reported for six years from the start date. IVAs (protected trust deeds in Scotland) stay on your Credit Report for the same amount of time but require completion to be confirmed by the insolvency practitioner overseeing the IVA, which is typically achieved within 5 years (3 for protected trust deeds).
Ensuring that your Credit Report is clear of any such records is crucial to maximising your chances of being accepted for credit and staying on top of your finances in general. Knowing when harmful entries are due to be removed can also give you a head start on building your Credit Rating as soon they come off.
How do I check my Credit Report?
The only way to see what a potential lender will see when you make an application is to check your Credit Report.
If you haven’t already, you can check your Multi Agency Credit Report free for 30 days, then just £14.99 per month. Cancel anytime quickly and easily online, by email, or freephone. Our Multi Agency Credit Reports show your complete information from the three Credit Reference Agencies, so you know you’re seeing everything a potential lender can see.
Your checkmyfile Credit Report will show you exactly when any negative information was added and how long is left before it is due to drop off.
Updated 06/01/2020 by Sam Griffin