How is a credit file like a sandwich?

You’ll often see us refer to a credit report as a financial passport because it holds the financial information that lenders use to make a decision when you apply for credit. But we’re willing to bet that you’ve never thought of your credit report as a sandwich before though…

This week is British Sandwich Week and what better way to celebrate the most popular lunch-time meal than by comparing it to your Noddle credit report.

Bread versus condiments

The secret to any good sandwich is getting the balance of bread to filling just right. Too many condiments and all you taste is mustard, but just one slice of cheese in a baguette isn’t much fun either. The same thinking goes for your credit report.

Lenders like to see that you can manage your finances well, but they also like to see that you have a stable and regular personal situation. So while you may have a perfect payment history, if you’ve moved house six times in the last two years, a lender could be concerned. Equally, you could have been on the electoral roll in the same house for the last ten years but if you currently have a lot of credit available to you then a lender may be wary of lending even more.

If you get the balance right then lenders will be more likely to take the first bite.

That first bite

The first bite of any sandwich tells you whether you’re going to enjoy it. If it tastes good then you’ll keep eating, but if all you get is a mouthful of anchovies and beetroot then chances are you’re unlikely to finish your lunch. The same goes for lenders when you apply for credit, which is why, if you’ve had poor credit in the past it doesn’t necessarily mean you’ll be turned down for credit.

For example, if you missed a string of payments three years ago, but can show that you’ve turned things around and are now managing your financial situation well, then lenders are likely to be more confident that any credit they lend may be well managed. On the flip side, if you used to pay everything on time but have recently fallen into financial difficulty and defaulted on accounts in the past few months, then lenders may get a taste of those anchovies and be less keen to lend.

Best Before Date

A sandwich doesn’t stay edible forever and the same goes for the information on a credit report. But rather than going mouldy, most of the information on your credit report drops off after six years. So if you’re been blighted by a bad finances in the past then here’s some good news, you can still rebuild a healthy credit rating over time.

‘Hands Off My Sandwich’

If you kept your sandwich in the communal fridge at work but were worried someone might eat it, then you might put a note on it telling others to keep their hands off. Did you know that you can do a similar thing with your credit report?

If you’re concerned about becoming a victim of identity fraud or already have been and want to protect yourself going forward, then you can put a CIFAS marker on your credit report. This means that whenever credit is applied for in your name the retailer or lenders have to make additional checks to ensure it’s you who they’re dealing with.

You can find out more information on CIFAS and CIFAS markers here.
So next time you’re biting into a cheese and pickle sarnie, take a thought for your credit report and why not check it, to see how tasty yours currently is.