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Credit Score and Credit Rating
Here we will give you information that will hopefully aid you in
improving your credit rating. Your credit score will be very influential
when it comes to lenders determining if you are good for the money.
So what is a credit score?
This is how lenders calculate if they are going to lend you money.
It’s an analysis of your credit history at that current moment.
The higher you score, the better the chance of getting a loan
How are they calculated?
Everyone’s score is calculated individually using a mathematical
formula that picks out the information from your credit history
and compares it to patterns in millions of past records. They look
for the things that they have identified as things that highlight
people not to lend to and those that show the opposite. What
is the most important factor to consider?
Most Credit Score Systems use five main factors to determine your
score. Here they are, listed in order…
• Payment History
• Amount owed
• Length of credit history
• New credit
• Types of credit in use
There may be a slight variation between the lenders, but essentially
this will remain the same.
Why do lenders use scores?
The lenders use this scoring system because it provides a very reliable
guide to the risk of lending money to people, just by using there
credit history data. The higher you’re score, the lower the
risk to the lenders, the greater chance of having the application
approved. Also, Banks are not keen on lending people money and Debt
Consolidation loans companies often also look for a good credit
score, to it’s often best to act fast rather than wait until
the problem grows and bills go unpaid.
So does everyone have a credit score?
Anyone who has applied for any kind of finance will have a Credit
Score, and anyone with a Credit Score will have a Credit Record.
They will always contain details on one account that has been
active for at least 6 months. A Credit Score will not be calculated
if the credit report hasn’t been updated in the last six
months, or if there are any statements of Fraud on your report,
or if all trade comments are being disputed. Generally, people
with high scores consistently:
• Pay bills on time
• Keep balances low on credit cards and other revolving
credit products
• Do not have too many accounts open at one time
• Receive a good, regular income.
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