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Credit Score Tips

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William Brister

Life in the 21st century is governed by borrowings. Thus, if a lender, bank or institution refuses to give you a loan, credit card or mortgage, naturally, there will be some explaining to do especially if your finances are in order and under control. Typically, there is a credit score calculated by lenders or creditors that can impact your life significantly. The credit score can range from a good credit score to a bad credit score. This credit score is needed to check credit worthiness while applying for a loan, mortgage or credit card. The lender uses it to assess the risk he takes in lending to you. Lenders use the information you give them on your application form along with details on your credit report to find out what credit you have taken out in the recent past, your repayment history, whether you have any court judgments or have been bankrupt and whether you are registered to vote. There is a credit score range wherein each item is given a value, the higher your score, the easier it is to borrow. There are bad credit scores and good credit scores and these are determined by the three main credit rating agencies - Experian, Equifax, Trans Union. So if you have your finances under control, why are you being turned down for a loan? Here are some of the reasons explaining your credit score.

Past borrowings insufficient - Although, one would like to believe that having no debts is a boon, it may not be sufficient reason for a lender to provide you the loan. Lenders rely on the credit score range and the details in your credit report to show them that you make repayments on time and are a reliable person. However, if there is no reference point, they have no idea of how might behave in future. This might lead them to turning you down. To avoid this, ensure that the creditor has full information about your situation, such as details of home ownership, mortgage payments, prudent use of debit and credit cards etc. After verification they can decide on your behalf favourably.

Not fitting the profile for the particular lender or the type of credit you asked for - Different lenders use different ways to work out their credit scores and sometimes one lender will even use different calculations for different products. They target specific groups of people and you may not fit their profile as a result you do not have a single credit score, good or bad. Before applying for a loan, do some research and identify lenders who want to deal with people like you and what product they have for you.

Several recent searches on your credit report - Each time you apply for credit, you permit the lender to search your credit report. This search leaves a record of the check that you and other lenders can see. If you apply to multiple lenders in a short duration, lenders may feel that you are taking on more credit than you can afford. Future lenders may believe that you are desperate for cash, overextended or a scam artist looking for fast credit. Whenever you approach lenders, explain that you only want a quote and ask them to amend the report if there are too many searches present on it.

Past problems - Past information about bankruptcy, missed credit repayments, unpaid arrears can stay in your credit report and blemish it. With a court judgment, the evidence is there for six years. Lenders see these and cross you out when scoring your credit application, because they fear you may not honour your obligations to them if you have failed with others in the past. To remedy this, you can ask them to add an explanation of the circumstances surrounding any problems that caused this information to be added to your credit report.

Not registered to vote - Lenders use local electoral registers to check that your true identity, where you live, work etc. If they don't find your name at your address, they may need to make further checks or can even turn you down. Ensure that you register at once and that you have been taken off the electoral roll at any previous addresses

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