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What Is A Credit Score ?
Your Credit Score is the single most important factor in determining whether or not you get approved for new loans, mortgages, credit cards, bank accounts and all other forms of credit.
Credit Scoring is a technique, which is used by all UK lending companies, to help them accurately predict the real risk of lending money or giving credit to you.
When you get your free credit report you will also get be given an option to get online access to your credit score.
Always check your free credit score before you apply for any type of credit such as credit cards, loans or a mortgage.
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YOUR FREE CREDIT SCORE IS EASY TO UNDERSTAND
Each lender will have a range of values, typically in a scale of say 0 to 1000, which represent the minimum and maximum scores attainable in their own scoring system.
Note that this minimum to maximum range could be different for each lender.
Using the scale above as an example would mean that any credit score calculated would have to be between 0 and 1000.
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On average, again using the example 0 to 1000 scoring scale, most people would be expected to have a score between 500 and 800.
Again using the same scale, if your score were towards the lower value (500) or below then you would be considered to have a low or poor credit rating.
If your score were nearer the higher value (800) or above then you would be considered to have a high or good credit rating.
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A credit score normally falls into one of five Credit Rating bands representing Very Poor, Poor, Fair, Good or Excellent.
Obviously this sort of measurement is not so precise as an actual credit score, but it does make it easier to get a more general feel of your credit status.
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YOUR CREDIT SCORE IS DYNAMIC
Your credit score is not a fixed number and it will have to be caclulated every time that you apply for a new loan or credit agreement.
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You do not have just a single credit score or credit rating because every lender will calculate your credit score using their very own points system and they will do this every time that you make an application for a loan or credit.
Therefore each time you apply for credit your score will be different and each lender could come up with a different score even on the same day.
Lenders can also determine what is a good or bad rating using a different points total. They could also score you differently for the different lending products that they offer.
Thus you could easily find yourself being rejected by one lender while being accepted by another!
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You can also get the credit reference agencies to issue you with a credit score based on the information they hold on you, but this is only an indicative value and will not necessarily be calculated in the same way as your lenders.
It will however provide a good idea of whether or not you are likely to have any problems when applying for loans or credit.
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IMPORTANT CREDIT SCORE FACTS
- The higher your credit score better it is for you
- Almost all lenders approve loans and credit based on your credit score
- A higher score means lower repayments and a better deal for you
- Higher scores also mean you pay lower interest rates
- Credit scores are determined by 5 main criteria:
- Your repayment history
- The amount you still owe (your current debt)
- The total length of your credit history
- The type of credit you have used (credit cards, loans, mortages)
- Any new credit you are applying for
Get your Free Credit Report and also get access to your Credit Score ...
Check your free credit score before you apply for credit so you don't get refused!
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