I recently tried to take out a phone contract but was refused on the basis of an unsatisfactory credit check.

I could not understand this as I have considerable assets and no debt. My credit cards are paid off each month by direct debit and we live in a large house with no mortgage.

I checked my credit reference file and everything was confirmed as good. It has been suggested that I have been rejected because I have no credit history as I have not taken out any credit in this country since returning from abroad 10 years ago.

Surely I am caught in a Catch-22 situation, as I cannot get a credit history?

PG, Cambs

Lack of a credit history is a problem that can affect people at both ends of the age spectrum and those who have lived abroad.

Research by Experian, the credit reference agency, found that there were nearly six million people in Britain who were virtually invisible to the financial system, because there was insufficient information available about their financial track record.

Having had a bank account or credit card for a long time may mean information won’t be given to the credit reference agencies. This is because banks routinely started to pass on information concerning, for example, overdrafts and mortgages to credit reference agencies only from around 2000.

People whose accounts had been set up earlier had not been notified that this would happen and so their credit histories couldn’t be shared automatically. For this to change the customer had to ask the bank or building society to release the information. Even once that is done, details about past transactions cannot be passed on retrospectively.

No credit history will mean would-be lenders – including mobile phone companies – lack evidence about the applicant’s reliability.

In your situation, you were able to acquire a Sim‑only pay-as-you-go phone only.

For someone who does not have a credit card there are credit cards with a low credit limit that enable customers to demonstrate reliability. Another issue can be whether you are registered on the electoral roll. Make sure that records of your address tally.

To get a free copy of your credit report contact one or more of the credit reference agencies. The main ones are Experian, Equifax and Callcredit (now part of TransUnion). Bear in mind that the records are not identical. Consider carefully before committing to any add-ons that may be marketed to you.

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