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| A Credit Score is something used by loan, mortgage and credit companies to decide whether you qualify for a particular product. A Credit Score looks at your current and past financial history, plus other personal details, and using mathematics, analyses what type of 'risk' you are. |
By 'risk' we mean whether it is likely you'll pay back the money borrowed; whether you can really afford the repayments etc.
Factors that can affect your score include:
- late or missed payments in the past
- County Court Judgements and arrears
- How much you currently owe - even if all your payments are up to date
- You not being on the electoral roll
- Applying for lots of new credit accounts - this is viewed that you are someone getting into financial trouble
- The length of your credit history
- Financial associations - other people listed on your credit file that have bad debts can affect your credit rating
Why Your Score Matters
Your Credit Scores matters because it is probably the most influential factor used by loan companies in deciding whether they will give you a loan/mortgage/other credit.
However, it is the lender who makes the final decision and they may well take in to account reasons for past credit problems. Apart from checking out your financial history, they will also need to look at your occupation; whether you have any equity in your mortgage, your income and savings etc.
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Your Credit Rating