You are interested in applying for a loan, but just how risky are you as a client, and what is your credit score?
To work out your credit score, various factors are taken into account. Different lenders may take different factors into consideration; however, the method remains the same.
If you feel that you are a risky client, do not fret. Repairing your credit rating is possible, but may take a bit of hard work and some time, possibly one or more years, depending on your current score and personal circumstances.
Generally speaking, you might not be able to find out your credit score, nor will lenders be obliged to tell you why your application has been denied. You can, however, gain access to the information in your credit file. This is the information used to calculate your credit score.
Following is a list of factors that may affect your credit score.
Your credit history:
Any missing or late payments, as well as bankruptcies filed and County Court Judgments will be saved and could reflect badly on your credit score. Improve your credit history by making payments on time. Missing a single payment may not necessarily count against you; however, missing three or more consecutive payments is not a good idea as you will be severely penalised.
Having existing loans or credit should not be a problem, provided that it has been well managed. Well managed loans and credit may actually count in your favour.
Time spent at your current address
If you have been living at your current address for less than three years, your credit score may be affected.
Bank accounts
If you have a new bank account, or no bank account at all, your credit score will be marked down. Be careful if you hold a joint bank account, or have made past credit applications jointly with another person. These factors could also come into play when applying for a loan.
No stable employment
Your credit score may be affected if you have held more than two jobs in the last three years. You may also be marked down if you had just recently changed jobs. Lenders prefer to lend to people with a stable employment.
Multiple credit applications
If you have recently applied for several loans or credit facilities within a short period of time, this may count against you.
Other people living at your address
Many lenders will consider the credit files of other people living at your address. This can sometimes be a problem should a previous tenant’s bad credit history affect your own. You should ask for a copy of the credit file relating to your postal address.
The process of applying for a loan may seem like a drawn out, complicated one, but lenders are just trying to protect their own interests, as well yours. If you feel that you match the criteria to apply for a loan, your application should be hassle-free. If you feel you are a high-risk client, approach your lender first before completely giving up.