In most instances, major lenders begin (and often end) the underwriting process by looking at the applicant’s credit report. Hence, credit scores are single-handedly determining the outcome of millions of applications for credit on a daily basis.
So it is hardly surprising that the once unheard-of credit report has become such a maligned and resented ‘demon’ for households across the UK. Nevertheless, getting to know the whole credit score system could hold the key to taking better control of your financial future.
In order to assess your eligibility for credit, lenders use one of the three major credit reference agencies to check your credit score – Callcredit, Equifax and Experian. Your credit report contains a variety of details documenting your financial activities over recent years, providing a cross-section snapshot of how responsible you are as a borrower.
For example, information stored on your credit report may pertain to the number of credit cards you have, your credit limits and current balances, late or missed payments, your current and previous registered address, bankruptcy data, county court judgments against your name and so on. Your credit report will also indicate your full name, your date of birth and residency status – all used for fraud detection and prevention purposes.
It’s also worth noting that every UK consumer has the right to check their credit report at any time. By taking note of any damage and discrepancies you come across, you’ll be in a far better position to do something about them.
When a lender accesses your credit report through one of the three major credit reference agencies, they’ll be presented with various details such as:
Contrary to popular belief, your age doesn’t necessarily have any impact on your credit report. Instead, lenders are more interested in your current circumstances and your financial history.
Of course, lenders are often hesitant to issue longer-term loans and lines of credit to older applicants. You may therefore find it more difficult to qualify for credit after reaching the age of 70 or 75. Nevertheless, a good retirement income combined with home ownership and plenty of savings can add up to an impressive credit score for older applicants.
Short answer – extremely important. It’s very difficult to get through life without seeking financial support from time to time. Now more than ever, major banks and lenders are scrutinising applicants exclusively on their credit reports and making decisions accordingly.
Maintaining a good credit score can be tricky, but can also be simplified by following these five important tips:
If you’re unsure about your eligibility for an affordable vehicle finance package, we’re here to help. PoorCredit- CarFinance.co.uk can arrange a ‘soft’ credit check on your behalf, which irrespective of the outcome won’t impact your credit score.