What affects your credit score

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Your ‘financial footprint’ tells potential lenders a lot about the type of borrower you are, so making sure yours is as healthy and as accurate as possible is key to securing the best deals.

When you borrow money or even apply for a loan, credit card, mortgage or overdraft, it’s recorded on credit reports held by the three credit reference bureaus; Equifax, Experian and TransUnion UK (formerly Call Credit).

Lenders use the data in your report to help them assess whether you are a suitable person for them to lend to. Your borrowing behaviour leaves a financial ‘footprint’ on your credit records, showing; how much credit you have, who you hold credit with and, crucially, whether you’ve kept up with your repayments.

If your credit score is good, this gives potential lenders confidence in you and makes you more likely to be offered a loan or credit agreement. If it looks patchy then it can mean you will struggle to get a credit card, loan or mortgage.

It's important to remember that when it comes to loans, lenders only have to offer their 'headline rate' (the one you usually see on advertisements) to 51% of successful applicants.

If your application doesn’t meet the highest criteria of what lenders consider to be 'low risk' then you could find that even if you’re accepted - you don’t qualify for the favourable rate you initially applied for.

That’s why it’s important that from time to time, you check your credit report to make sure that the information held is accurate. If there is a mistake on your file, you need to ask the company that filed the incorrect information to correct it and have this noted on your credit report. It’s in your interest to ensure that the information held by the credit bureaus accurately reflects your circumstances.

For instance, County Court Judgements (CCJs) for debt seriously affect your ability to get credit. If you had a CCJ which is now settled, ensure that this is updated on your credit file.

To keep your credit file in good order, here are the sort of things that lenders are checking:

Whether you're on electoral roll

Contact your local Electoral Registration Office to make sure you’re on the electoral roll. It's important so that potential lenders can verify your name and fixed address.

Whether you've missed any repayments

Lenders will look at your history of repaying previous debts as an indication of your ability to pay off new ones. Always make sure you pay off at least the minimum amount due.

How many active accounts you have

Lenders take into consideration the amount you could borrow on existing accounts, not just what you currently owe.

How many credit applications you've made

Lenders worry when you make lots of credit applications in a short space of time, because they see it as a sign of financial trouble. Use services that allow you to try a soft search before you apply for a product, to see how likely you are to be accepted. And, stop applying if you’ve been declined for credit because every decline has a negative impact on your file.

If you have an active joint account

This financially connects you to another person, so lenders will consider this other person's financial history when looking at any applicaiton you make. If you separate from a partner, make sure that your credit history is separated too.

Carry out a ‘soft’ or ‘smart’ search before you apply for a credit card or loan

Unsuccessful or repeat applications can have a negative effect on your credit score. A soft search (also known as a ‘smart search’) lets you check what credit deals you are most likely to be accepted for without affecting your credit score.

Try our eligibility checker to find out what Neyber products that you’re most likely to be accepted for. You can do this without damaging your credit score.

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