Putting together the pieces – how lenders work out your credit risk.
The current climate means that credit card companies and banks look at credit history information very carefully when working out whether or not to give you credit.
It’s no secret that in last couple of years lenders (whether it’s banks, credit card companies or mortgage providers) have got much tougher about who they’ll lend money to and who they’ll reject. But although – in general terms - you’re more likely to be turned down now than before the credit crunch, there’s no one-size-fits-all policy when it comes to lending. Different lenders use information from your credit file and your application form in different ways.
Your credit score is a number that lenders use to assess how good a credit risk you are. The lower your score, the harder it will be to get credit.
You may think you’re a good credit risk, but do you know how lenders see you? When they work out whether or not to lend you money and how much interest to charge, they don’t just look at your credit file, they’ll also scrutinise a range of information about you, such as how long you’ve been with the same bank and whether you’ve changed jobs recently. All this information goes into working out your credit score.
If you have a mortgage or loan with someone who has a bad credit record, it could affect your rating.
If you have joint loans, your credit files will be linked. But the link may still be there once the loans have been paid off. If that's the case you can remove it.
It’s a good idea to get a copy of your credit file from time to time, but it’s especially important if you think your information could be linked with someone else’s. If you signed up to a mortgage or loan with your partner or husband, their credit file will be linked to yours (even if you’re no longer together). And if they have a history of not paying their debts on time, it could affect how much interest you pay when you borrow money and even whether you’re offered credit in the first place.
