According to the Bank of England, last year Britons owed roughly ?1.8 trillion in the form of mortgage debt. Another ?213bn was owed in the form of credit cards, loans and overdrafts.

It?s easy to see from these figures that credit is big business in Britain, with most UK adults borrowing money as part of their everyday finances.

As credit plays such a big role in our everyday lives, with new mortgages, secured loans and credit cards being applied for daily, it is vital to lenders that they have a good idea of how we will repay their money.

This is where credit reports come into play. Credit reference agencies – the main ones being Experian, Equifax and Callcredit – keep a credit ?report? or ?record? for every adult in the UK.

Within each report a wealth of information is available, split up into two main areas: public information and credit account information.

Public information is obtained from the electoral roll and includes things such as your name, address, date of birth and marital status. Your employment history, income and any property you own may also be included.

With this information lenders will already be able to get a good idea of how able an applicant will be to repay any money borrowed. For instance, a middle aged business man living in the wealthy suburbs of London is considered considerably more likely to repay a loan than a struggling single teenage mother.

However, such information only gives lenders a partial idea as there are always exceptions to the rule. This is why the second part of the credit record is used.

Within this section of the report, information ? supplied by all lenders – is to be found, regarding any current credit history. This allows lenders to see how much you owe or have owed, and if you repay your debts on time.

For the same reason, information regarding any county court judgements (CCJs), references to debt collection agencies and bankruptcy orders, where applicable, are also found here.

All of this information is complied and used to generate a ?credit score?, unique to every adult. This process know as ?credit scoring? has become much more ?scientific? over the years, as more and more lenders are now using what is know as ?risk-based pricing?.

Instead of simply rejecting an applicant due to a low score, they are instead offered higher rates of interest and are unable to loan larger amounts. On the other end of the spectrum, applicants with a higher score are offered larger sums of money with more desirable interest rates and terms and conditions.

For this reason, it really does pay to make sure your personal credit score is a true reflection of your financial situation, for this reason, everyone is able to view an amend any errors found on their report.

This can be done by contacting the credit reference agencies directly. You can obtain details of your records by making an application in writing and paying ?2 by cheque or postal order, giving details of your last three years? addresses.

The three agencies can be contacted at the following addresses:

Callcredit, Consumer Services Team, PO Box 491, Leeds, LS3 1WZ
Equifax, Credit File Advice Centre, PO Box 3001, Glasgow, G81 2DT
Experian, Consumer Help Service, PO Box 8000, Nottingham, NG1 5GX