Press Release

A THIRD OF UK CONSUMERS THINK THEY HAVE A POOR CREDIT SCORE

UK Consumers lack knowledge when it comes to the facts that affect their credit score, according to Equifax survey

www.equifax.co.uk

London - 3rd June 2008 - With the news that mortgage approvals have hit a new low, leading online instant credit information provider, Equifax, is warning that many consumers show a distinct lack of knowledge when it comes to the facts that influence their credit score. 32% of consumers surveyed by Equifax earlier this year revealed that they believed they had a poor credit score, with a staggering 83% confirming that they have been declined credit. 51% of those thought they had a poor credit rating, but when asked what they thought might have caused that only 19% thought it might have been because they had defaulted on a credit card.

"Awareness of financial issues in the general consumer market is probably higher than it's been for quite a few years" confirmed Neil Munroe, External Affairs Director, Equifax. "Yet it feels that much of the advice and information that is being put out by the media and organisations like ourselves is falling on deaf ears. "39% of respondents to our survey did not think that the fact they pay only the minimum balance on their monthly credit card bill would have an effect on their credit rating. 28% said they didn't know if it would or not."

The number of new mortgages being approved for house purchase hit a new low in April, according to figures from the Bank of England. Just 58,000 such mortgages were approved, the lowest since the Bank began reporting the figures in 1993. That was 8% fewer than in March and nearly half the level of lending that was approved a year ago. Mortgage lending is expected to slump this year because of the credit crunch and a shortage of finance to lend. Both the number of loans approved, and the amount of money offered to borrowers, has now fallen for 12 months in a row.

The news that Egg is closing 160,000 credit card accounts because the customers do not have good credit ratings has prompted many consumers to ask the question - 'What is a good credit rating?' The consumers affected have also been left wondering if the cancellation of their Egg credit card will affect their future ability to get credit.

Leading credit information provider, Equifax, offers advice on what makes up an individual's credit score. And the first point it is making is that if an individual has kept payments on their Egg card up to date, then its cancellation should have no impact on their credit rating. If, however, they have let payments fall into arrears then these would have already shown on their credit file for other lenders to see in the future.

As Neil Munroe, External Affairs Director, Equifax explains, the decision by Egg is indicative of a general tightening of credit granting across the UK. "Since the credit crunch last summer, we have seen a number of lenders tightening their credit granting criteria with the result that some consumers have not been able to get the credit deals they wanted. This goes to reinforce the fact that credit is not a right - and that consumers need to understand what lenders are looking for when granting credit and operating credit card accounts.

"Knowing that a consumer will be to able repay the credit extended is obviously the number one criteria. But I think consumers also need to recognise that lenders need to be able to make money as commercial organisations and, therefore, they will also look at customers from a profitability perspective.

"But what Egg's decision does indicate more than anything is that consumers need to be as well informed as possible about how they look to a lender. Many consumers see the credit process as a complete mystery - something over which they have no control. But that doesn't have to be the case."

Lenders make checks with credit reference agencies to see whether an applicant has kept up to date on repaying their credit. Lenders also use a "credit scoring" system to decide whether or not to lend to consumers - and in some instances - at what price, as well as for on-going account management. But basically, the better an individual's credit score, the better the rate they will get, helping them take advantage of the best deals.

The Equifax credit score works by giving an individual points, based on how they compare with people who pay their credit on time. The more favourably someone compares to the national average, the better their score. Consumers will also be told how likely it is that they will be able to get a loan based on their score. And a 'traffic light' signal helps consumers identify information that might be damaging their score.

The Equifax Credit Rating™ dispels the mystery of credit scores, which Equifax research has revealed remains one of the key concerns for consumers. What makes the Equifax Credit Rating™ so powerful is that it is based on all the credit information used by lenders when assessing applications, and it is available online instantly, providing consumers with a valuable insight into their credit rating.

To obtain your Equifax Credit Rating instantly online go to www.equifax.co.uk. The price is £14.95.

THE EQUIFAX CREDIT SCORE TEST

To help consumers work out how they might score when next applying for credit, Equifax has developed the Credit Score Test.

Quiz Questions

Questions	Yes	No	N/A
Are you registered to vote at your present address?	10	0
Do you have at least two active credit accounts? Such as a credit card, store card or loan.	10	0
Are all your credit account payments up to date?	15	0	0
Have you missed payments on your credit accounts in the last 2 years?	0	10	0
Do you have any Count Court Judgments or been declared bankrupt?	0	25
Have you ever defaulted on a credit agreement?	0	25
Have you applied for more than two items of credit in the last six months?	0	5

Scorecard

Excellent - Your score shows that you would be a strong candidate for credit	90-100
Good - Your score shows that you have a good chance of being granted credit	70-89
Fair - Your score shows you may have some problems obtaining credit	50-69
Poor - Your score shows you may have considerable difficulties in obtaining credit	0-49