Credit confusion cleared up with these top tips

YOUR CONSUMER RIGHTS CHAMPION

- Martyn James is a leading consumer rights campaigner, TV and radio broadcaster and journalist

Your credit file is your passport to loans, credit, mortgages and more.

Yet judging by my postbag, there's a lot of confusion over what lies within your credit reference report, how credit scoring works and why you might get turned down if you want to borrow money. Fear not! Here's my guide to credit scores, files and your rights.

Credit score versus credit reference file

Think of your credit score as a number that helps lenders understand how much money they can lend to you. The higher the score, the safer a prospect you are. Credit scores go up and down over time, depending on your finances, but even in the worst scenarios you can always turn them around.

Credit reference agencies set your credit score and there are three of them in the UK: Experian, Equifax and TransUnion.

You can request your statutory credit report for free (avoid unnecessary subscription services). If there is anything on there that is incorrect or unfair, you can appeal.