Prior to your release (if you are able to through resettlement), or as soon as you can after release, I would suggest that you check your credit score.
Failing to pay for your mobile phone or defaulting on your mortgage payments, whilst in prison could have had catastrophic impact on how lenders and utility companies see you as a financial risk when applying for credit.
How Can I Check my Credit Score?
In the UK, there are companies known as ‘credit reference agencies’ (CRAs.) These companies compile information on how well you manage credit and make your payments.
The three main CRAs in the UK are:
Each of them holds a file on you, called a credit report (or credit file), although the information they hold on you might be slightly different for each CRA.
What is a credit check?
A credit check is like a search on your financial CV – also called a Credit Report.
Who runs a credit check on You?
Credit checks are run by numerous agencies and credit providers such as banks and credit cards.
I have noted that banks often close your bank account if they are aware that you have entered prison – watch out for this.
- Utilities suppliers, gas, electricity etc.
- Letting agencies and landlords – this is very important if you are trying to obtain rented accommodation
- Mobile phone companies – not continuing to pay for your mobile phone on entering prison will impact on your credit score
What is in my Credit Report?
There are often different versions of your credit report, because they are compiled by three different agencies – Experian, Equifax and TransUnion (formerly Callcredit).
The main components of your credit report are: –
- Your name address and date of birth
- The individual accounts and amounts outstanding that you have borrowed
- Any County Court Judgments (CCJs)
- Whether you have been declared bankrupt or entered into an Individual Voluntary Arrangement (IVA)
Each Credit Record is given a credit score – essentially the higher the number the lower the risk of lending you any money.
What is a Soft Credit Check?
A soft Credit Check is also known as a ‘background’ check.
Soft credit checks are however recorded on your report but have no impact on your credit rating.
They are often undertaken by companies before they run a full credit check. They do this because it gives them a good indication of your credit worthiness.
An example of a soft credit check is when you check your own credit report or a company checks you for an identity check.
What is a Hard Credit Check?
This is where a company makes a complete search of your credit record.
This may be done to give the lender further clarification on something found on a soft credit check.
These are mainly undertaken when you apply for a loan or a credit card or when you apply for a pay-monthly mobile phone contract.
IMPORTANT: make sure you ask any lender which credit check they will be undertaking because too many hard credit checks in a given period can have a negative impact upon your credit score.
Getting your Credit Card Report for FREE
- Experian – you can sign up for a free 30-day trial but will cost £14.99 if not cancelled
- Equifax – like Experian you can sign up for a 30-day trial for its full credit monitoring service but you will need to cancel to avoid a £7.95 a month charge
- Clearscore – provides a free Equifax report every month
- TransUnion (formerly Callcredit) – they offer free access to their credit reports through a service called Noddle (now creditkarma)
GET YOUR TAX AFFAIRS IN ORDER PRE-RELEASE
Remember to contact The Tax Academy CIC to review your tax affairs to ensure they are up to date. There is nothing worse than being released from prison and finding that you have tax penalties and tax debt that need to be resolved with HMRC.
Please contact Paul Retout from The Tax Academy CIC on 01824 704535 or write to me:
The Tax Academy CIC
Unit 4, Ffordd Yr Onnen
Lon Parcwr Business Park
Family members can submit a request form which you can find here.
In Part 2 next month I will cover how to correct credit card report mistakes and hopefully dispel some of the confusion surrounding your credit report.
By Paul Retout
About the Author
Paul Retout is a tax specialist and tax author and founder of The Tax Academy.
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