What is a credit rating?
A credit rating is a score that you are allocated
which depicts your ability to repay a loan. Lenders will not
tell you what information goes into your credit score so they
can prevent fraud.
Why is a credit rating important?
Your credit rating is a key part determinining
if a lender will lend you money and in many cases at what rate.
For example you a person with a good credit
rating may pay several percent less for a personal loan than
a customer with a less favuorable rating
Factors affecting your credit rating
- your earnings and job stablility e.g. you
are paid monthly, and have been employed for a while and in
a skilled job will help.
- Your outgoings - how much you spend each
month and how much you have left to replay the loan
- Your past credit history - if you have had
loans in the past and repaid them it will help, if you have
defaulted or were late making payments it can have a negative
- Your postcode - this plays a big part. If
your area is considered a wealthy and credit worthy area it
will help you get a loan.
- Court proceedings and criminal record - if
you have a criminal record, specially for fraud, this is a
big no no for lenders. A county court judgement (court action
for not paying your debts) this will have a negative impact
on your credit rating .