Credit Score Basics > Can HMRC look at your credit file?

Can HMRC look at your credit file?

Wollit Team2 minute read · Updated 23rd July 2024

Yes, HMRC can look at your credit file. However, it only does so in very specific situations, it can only access the minimum information necessary, and must have reasonable grounds to do so.

Also, while HMRC checks do not directly impact your credit score, their investigations could indirectly affect your finances and credit score if you end up having to pay a penalty you can’t afford.

If HMRC contacts you about your credit file, read the letter carefully, give them the information they require, and seek advice if needed. You have the right to appeal decisions you disagree with. Here are your rights and what you can do.

When can HMRC access my credit file?

HMRC's main use of credit reference agency data is to identify potential undisclosed partners in tax credit claims. They use the data to find cases where someone is claiming as a single person but HMRC believes they are actually part of a couple.

If HMRC identifies a potential undisclosed partner, they will write to the claimant. If HMRC has enough evidence, they may immediately terminate the current tax credit award and amend previous years. If not, they will request more information from the claimant.

Claimants who receive these letters can appeal the decision. Just because someone else is using your address doesn't necessarily mean you are a couple for tax credit purposes.

HMRC also uses credit reference agency data to verify identities and residency when processing tax credit claims. And they can access the data to combat fraud, money laundering, and recover unpaid taxes and debts.

However, HMRC cannot access your full credit report at will. There are strict rules around when and how they can use this data:

HMRC can only access the minimum information necessary for a specific purpose.
They must have reasonable grounds to suspect fraud or error before accessing data.
And you have the right to appeal decisions made by HMRC based on credit reference agency data.

Basically, while HMRC does have some ability to check your credit file, it is quite limited and strictly regulated.

What should I do if HMRC contacts me about my credit file?

If you receive a letter from HMRC about your credit file and tax credits, here are some steps to take:

Read the letter carefully to understand why HMRC has contacted you and what they are asking for.
If you disagree with HMRC's decision, you have the right to appeal. Seek advice from a tax accountant or solicitor if needed.
Provide any evidence or information HMRC has requested to help resolve the issue.
Keep copies of all correspondence with HMRC about this matter.
If you are struggling financially due to changes in your tax credit claim, seek advice on managing debt and accessing support.

Remember, just because someone else is using your address doesn't necessarily mean you are a couple for tax credit purposes. HMRC's decision can be challenged if you have evidence to the contrary.

Can HMRC's checks affect my credit score?

No, HMRC's checks on your credit file do not directly affect your credit score. Your credit score is based on factors like:

Making payments on time.
Keeping credit card balances low.
Having a mix of credit types.
Applying for new credit.
And length of credit history.

In other words, HMRC checks are not one of the factors that go into your credit score calculation. They are not recorded on your credit report and do not impact your score.

If you’re concerned about your credit score, then focus on building a history of timely repayments. There are a number of tools you can do for this, and one such tool is Wollit.

Wollit is an app that reports your monthly subscription as loan repayment to the credit reference agencies, helping you build your credit history and potentially improving your credit score.

On top of this, Wollit can also report your monthly rent payment to Experian, adding another line in your credit report that shows lenders you're responsible and pay your bills on time. In time, this will help you improve your credit score so you won’t need to be worried about any credit checks, be they from HMRC, lenders, or anyone else.