Credit Guide

Your Credit Score

When you apply for a bank account, credit card, personal loan, mortgage or hire purchase agreement, the lender will run your application through a credit scoring system. Credit scoring works by awarding points (or deducting points) according to the answers you give on the application form.

Card Consolidation Credit Debt Although it is very unlikely a lender will reveal exactly how they score a credit application (due to the fact that it might encourage people to give false answers to boost their score) there are general rules that apply to almost all applications. Owning your own home or having lived in your current home for a long time helps, as does being in the same job for a long time. Being married often works in your favour, but having children has been known to work against you. Having a new or no bank account will look bad. Basically, lenders are looking for settled, stable and responsible applicants as they are statistically less likely to default on a loan.

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Because each bureau can and does receive information from different banks and creditors, your credit score (also referred to as "FICO score") can differ from credit bureau to credit bureau. While credit scores themselves range from 350 to 850, a FICO score of 700 from Experian is generally considered the equivalent of a 700 FICO score from Equifax or TransUnion. Regardless of which bureau supplies your credit report rating, the higher your FICO score, the better your chances are of securing a loan, with a favorable interest rate and ultimately having a stronger more solid credit history.

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1. Electoral Roll
Not being on the Electoral Roll can severely hamper any application for credit. Make sure your details are up to date if you have recently moved house, etc.

In the US, all three credit reference agencies distribute a standardised credit scoring system known as FICO scores, developed by Fair Isaac. The higher your FICO, the better. FICO scores also exist in the UK, but are not distributed by the UK credit reference agencies, who instead distribute their own bureau scores (known as Callscore, Delphi and Wescore).

Apply Online For Credit Card 2. Poor Credit History
Up to 35% of your credit score will be accounted for by your previous credit history. CCJ's, defaults and late/missed payments will all stay on your credit file for 6 years, but a sustained period (around 12 months) of regular payments will help to counterbalance the negatives.

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By Card Credit Debt Debt Guide 3. Time at current address
If you have lived at your current address for less than 3 years, your credit score will be adversely affected. This is especially true if you are a tenant. The more addresses you have had in the 3 years, the greater the negative effect will be.

Lenders take into account these credit scores which can be obtained from credit agencies, such as Equifax or Experion.

Credit Repair 4. Too many credit applications over a short period
Each time you apply for credit (any credit), a search will be made and recorded on your credit file. If you are seen to be applying unsuccessfully to too many lenders in a short space of time, your credit score will be affected negatively. Try not to make more than 1 or 2 applications a month.

Active Credit Credit Guide 5. New Job
Lenders are looking for continuity in your employment record, so being in the same job for a long time will give you the best credit score for this section. 2 jobs in three years need not make too much difference, especially if it can be shown that you changed jobs for a pay increase. Periods of unemployment between jobs will also look bad to lenders.

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Bad Car Credit Guide Loan This article was written and supplied by Finance Extra, the place to find free personal finance advice.

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