UK Credit Problems - Credit Scores
You have to be approved for a loan and this is done through a credit rating check. A credit check will be run on you, which means your credit history will be looked into and any past debt problems will become apparent.
Credit Rating
A credit rating check reveals elements like reliability in
paying back any previous loans, employment, marital status, age and address
history and these will all be taken into account when being considered for credit of any kind.
If you have previously taken out a loan and
have failed to make payments resulting in county court judgments (CCJ’s )
against you, then you will be classed as a high risk borrower. If you have
changed jobs frequently or continuously moved address then you will probably be
looked upon as a high risk borrower. Any previous loan defaults, mortgage or rent arrears, bankruptcy,
IVA's will all affect your credit rating adversely meaning your credit history will work against you.
Even so, you should not give up - you can still get a loan
even after having CCJ’s or arrears and remember if you manage to keep up the regular payments
on any credit granted then this can only help you to improve your credit rating for the future.
Improving your credit rating will mean you find it easier to obtain a
loan or any type of finance in the future.
Credit Score
Every element of a credit check results in a score. Having been in the same job for 10 years, lived at your current home for 15 years and previously repaid credit back without problems, will all gain positive scores. If you have CCJ's or have no home and are unemployed or if you never had credit then these would result in negative scores. All the scores are totalled together to obtain your total credit score or credit rating.
Lenders use the credit score to ascertain what level of risk they would be taking should they grant you finance. Some lenders will only lend to people with a high credit check score, as they do not wish to take a risk whilst some will lend to people with lower credit scores.
