Credit Scoring advice and information

In the UK information about every financially active adult is held by three credit reference agencies, which are Experian, Equifax and CallCredit. Within these files you will find information on your personal information, such as your name, partner's details and any previous addresses as well as publicly available information from the electoral roll, court judgements, and details of bankruptcies. It will also detail your credit and financial history, including details of all your current and previous financial accounts. It will demonstrate when you have applied for credit in the past and how much credit you currently have available to you and finally it will show what your record of repaying debts is like.

There is much academic research into credit scoring within the UK and it is closely regulated by the financial services authority. Also within the UK it is highly difficult for a customer to know in advance it they have a high enough credit score to be accepted for credit from a lender. This is due to the complexity and structure of credit scoring and the fact that whether or not you will be accepted via your credit score differs from lender to lender.

Most people will need to lend money at some point within their life and every time we do lenders will check our credit history. Some of the most common aspects that will require a credit check to be carried out are if you are trying to get a loan, mortgage, credit card, contract mobile phone or even monthly car insurance.

Your credit score is a numerical expression which is based on the analysis of your credit files. It is to determine the likelihood of you repaying your debts in a timely manner. A credit score is primarily based on credit report information typically sourced from credit bureaus / credit reference agencies.

The reason why credit scores are carried out is to evaluate the potential risk posed by lending money to consumers. Credit scoring is not limited to banks but is also used by other organisations such as mobile phone companies and government departments. Lenders want to know that you can manage credit responsibly. If you have too much credit on your file it will worry lenders and put them off giving you any more; however having too little credit on your file will not help you either as you will be seen to lenders as being unprofitable. If you really want to make lenders interested then you should aim to have a credit file that demonstrates that you have a proven track record of successfully managing credit, whether it is in the form of timely repayments on a loan or by clearing the monthly balance on your credit card.

If you are trying to gain a loan or a mortgage or a contract mobile phone etc and it requires a check on your credit score, dont worry if you have previously been turned down. This is due to the fact that just because one person has turned you down it doesnt mean that others will.

About The Author Helen is the web master of Edge of Bankruptcy, specialists in advice surrounding all aspects of your Credit Score.