If you’re in the market for a loan or any other type of borrowing then your credit report is where lenders will go to see if you're credit worthy. If they like what they see, then you’re good to go but if you’re turned down for credit then this can also negatively impact your credit score.
If you are turned down then they must tell you why and share the details of the credit reference agency they used – Experian, Equifax and TransUnion UK (formerly Call Credit). In this article, you’ll learn what lenders are looking for so that you have all the information before you apply.
1. Good credit history and paying minimums
Lenders are looking to see how good you’ve been at managing your bills and any past credit. Missed payments may cause the lender to worry about your ability to make repayments if you were approved.
Paying minimums from time to time isn’t necessarily a big problem but consistently paying the minimums month-on-month indicates that you can’t afford to pay the full balance and lenders might think twice about granting additional credit. You may also experience some difficulties if there isn’t much information about you on your credit report.
2. No court judgements or bankruptcies
Any bankruptcies or County Court Judgements cast doubt over your financial health and are likely to put a lender off. They’ll worry if you’ll run into financial trouble and struggle to meet the repayments.
3. Having too much experience with credit
Usually lenders like to see someone experienced, but there is a fine line. If you have lots of outstanding credit and have made these applications in a short space of time, then it could be an indicator that all is not well in your financial life.
If you’re over-indebted and taking on a lot of credit, lenders will be apprehensive about loading on more credit over concerns whether you can manage to meet all credit commitments at once.
Lenders will have an eye out for indications that someone has been applying for credit under a false identity. They’ll also be checking to see if the information you’ve provided is consistent with the information you’ve provided to previous lenders.
5. Financial associates
If you’re financially connected to another person i.e. if you share a joint account then they are considered a “financial associate”. Lenders will take into account the credit report information available on these individuals in addition to your own.
If a financial associate has missed payments on their report then this can affect you event if your own report is clean as a whistle.
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