When assessing an application for credit, individual lenders have their own criteria on which they rate borrowers. But they also rely on the information held on your credit file by credit bureaus--known as credit reference agencies in the United Kingdom--that compile information about an individual's borrowing behavior. These agencies collect personal data from various sources including the electoral roll and court records. All this information form part of the criteria for assessing your creditworthiness.
The Electoral Roll
When you applying for credit, U.K. credit agencies such as Experian and Equifax check the electoral roll for the name and address you have provided to the lender. The electoral register, which is compiled by local authorities, holds accurate details about a registered individual. Accordingly, being on the electoral roll confirms to the lender that you are no longer a minor since you must be 18 or older to vote in the United Kingdom. If you are not found on the electoral roll or if there are any discrepancies, you may be turned down and your credit score will suffer.
County Court Judgments
When a creditor takes you to court because you have failed to repay your debt, you may have a county court judgment (CCJ) passed against you. This is when a judge orders you to repay the money you owe to the creditor within a certain amount of time. Failing to follow the order will result in your CCJ being recorded on the Register of County Court Judgments for six years. This record shows up every time a lender conducts a credit search; having one means you have a bad history of borrowing. Avoid having a CCJ registered against you by repaying your debt within one month of the judgment.
Previous Borrowing
Although lenders depend on the response they receive from the credit bureau, they also assess you according to their definition of the perfect customer. Some may see you as the perfect opportunity to make money, while others may not find too high a risk. So while one lender may turn you down, another may still accept you. However, making multiply credit applications means multiple credit searches, which harm your credit score as each search is recorded on your file.
Credit History
British creditors prefer to lend money to someone with a high credit score and a good credit record. But having no records on your credit file will not necessarily or automatically make your credit score high. In the same way that lenders are reluctant to lend to someone with too much credit, they also refrain from giving credit to someone no credit history at all as they can't be sure of the person's creditworthiness.
Income and Employment Status
Although the details of your earnings and employment status are not registered on your credit file, the information often used by lenders to determine whether you can repay the amount you are asking to borrow. Being in full-time, permanent employment and earning a relatively good income may be an added bonus on your application as it assures the lender that you are not likely to struggle to pay off your debt.
0 comments:
Post a Comment