Callcredit to offer free credit reports
Credit card customers will be able to make unlimited checks on their credit reports for free. Credit reference agency Callcredit is set to allow its customers free access to its credit reports from this autumn.
Callcredit's decision will put it in a unique position compared to its competitors Equifax and Experian, which both offer 30-day free trials but then start charging customers a monthly fee of £6.99 and £14.99 respectively for their 'premium services'.
The credit report system
The law currently states that everyone is entitled to one statutory £2 credit report a year through one of the three credit agencies.
Until the launch of its new service Noddle, Callcredit has stopped its free one-month introductory offer. Customers can still sign up to its credit check service but will have to pay £12 every quarter.
Callcredit will fund Noddle by partnering up with an as yet unnamed 'leading' price comparison site. Customers will be notified of credit cards and loans that suit their credit scores.
They will also have access to money-off vouchers and special offers to suit their particular interests although Duncan Bowker, spokesperson for Callcredit, assures customers they don't have to receive email notifications of all of these: "It's completely up to the individual - if they don't want to receive all the offers they can unsubscribe to this part of the service. There's no reason for people to suspect they will be inundated with emails."
Bowker says the only specification for subscribers is that they access their report once a quarter. He also says Callcredit's smaller size, compared to Equifax and Experian, has allowed it be "more flexible and innovative" in developing Noddle. He adds: "It will be interesting to monitor what happens with the other agencies now."
Eqifax and Experian don't follow suit
Meanwhile, Equifax has come out in response to say it is unlikely to follow suit: "We sit in the middle between consumers and lenders and are not about to change that," says Neil Munroe, spokesperson for Equifax.
He also says "it's very difficult at the moment" to determine how free the service will prove in practice with consumers on the receiving end of many offers and "marketing" emails.
Experian has issued a statement, which is less forthcoming, simply saying: "We continually invest in a whole host of new services that we can offer members, supported by the largest dedicated team of experts on hand to help our customers improve their credit scores and get the best deals."
Both agencies also take issue with Callcredit's research, which reveals three-quarters of a million Britons have unsuspectingly signed up to monthly direct debits as a result of starting a free trial with one of the credit agencies.
"I take on board any difficulties that customers have had canceling their service and Equifax is trying to improve its transparency. But it is always made clear that after the 30-day trial subscribers will have to pay a monthly fee," says Munroe.
James Jones, spokesperson for Experian reiterates this: "We make it absolutely crystal clear that it's a subscription service and it's also very easy to cancel the service."
Customers can pre-register with noddle.co.uk to take part in tests over the coming weeks before the service goes live later this year.
A report containing detailed information on a person’s credit history, a record of an individual’s (or company’s) past borrowing and repaying, including information about late payments and bankruptcy. It also includes all applications a person has made for financial products and whether they were rejected or accepted. Your credit report can be obtained by prospective lenders to determine your creditworthiness.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.