Which? says six pounds for your credit report is money well spent

Search: More on checking your credit files

The �6 it costs to check credit files is a small price to pay as uncovering potentially costly mistakes is not unusual, says Which? Money.

A survey of Which? members showed seven in ten had never checked their files through a credit reference agency.

1,591 Which? online panel members took part in the survey which covered checking their credit files.

Meanwhile, one in five people who had run a check discovered mistakes.

Scoring systems

With lenders increasingly using credit-scoring systems to decide the rate of interest they charge customers, an inaccurate file can mean either being turned down for credit, or being charged a higher rate of interest.

Most lenders use a credit-scoring system which takes into account the information on people's credit files, details on the application form and any other information they hold about the borrower.

Different lenders use different scoring systems so people can be accepted by one lender and rejected by another.

Which? Money advises people to check their files with all three credit reference agencies annually, or at least before applying for credit.

The three credit reference agencies are Call Credit, Equifax and Experian.

The logic behind checking with all the agencies is that different lenders use different agencies and they don't all hold the same information, so people need to check all three credit files.

Not expensive

People don't have to pay for expensive online services from the agencies or anti-identity theft insurance, though - files can be checked for just �2 each, or often for free with an online trial.

Martyn Hocking, Editor, Which? Money, says: "Checking your credit files is quick, simple and cheap. You can check all three files for a total cost of £6 - definitely money well spent when you consider what you could pay in additional interest if there's a mistake on your files."

"You don't have to pay for expensive options promoted by the agencies, though, and watch out for unnecessary ID theft insurance, you can protect yourself for far less simply by checking your files and bank statements."

Around 80 per cent of loans and a quarter of credit cards now offer different interest rates depending on the borrower's financial circumstances (source: Moneyfacts).

The most highly-rated applicants get the lowest rates of interest and less creditworthy applicants pay higher rates of interest.

For example, on a �20,000 loan over six years, being charged seven per cent interest rather than six per cent interest would cost an extra �686.

To view your personal credit information that lenders are currently basing their credit decisions on, apply now for a free online credit report. Click here for a free 30-day trial and a free copy of your Experian credit report