Your credit rating, in the UK is also known as your credit score.
Firstly it is important to know, that you do not have one universal credit rating. Every time you apply for credit the lender assesses your risk, to them, in terms of not paying back the credit, and applies a credit rating or score to you at the point of application.
Once you get your head around this concept, makes life slightly easier. The uk credit reference agencies, offer credit rating, for example, Experian’s top credit rating is 999, or Equifax’s is 900. This does not mean you will be accepted for any finance you require, but it is does mean your credit history looks positive.
Top Factors that Affect your Credit Rating the Most in Your Credit Report in order of negative impact
- Declared Bankrupt, this is a stone cold killer of credit ratings. Lenders want to see you maintaining your current credit commitments in an effective manner, going bankrupt means exactly the opposite.
- Not as bad as bankruptcy, but CCJ’s (County Court Judgements) or any Defaults (where payments are in arrears), are quick route to not getting a mortgage any time soon.
- Also high up on the list, is not having any credit history at all, lenders don’t like an unknown quantity, new to the country or new to credit?
- Not paying your current financial obligations, on time, and not had late payments, e.g. with a loan, credit card, mortgage for example.
- Got a GAIN entry, i.e. had a credit agreement, and tried to do a runner, without telling your lender your new address?!
- Multiple Credit Searches on your credit report, in a short space of time (i.e. don’t apply for multiple credit products at once), this looks Identity Fraud.
- Financial Associations – Dumped your partner, as they were no good? Make sure they don’t continue to affect you through their poor credit history (for example on a joint account).
- What percentage of your overall credit limit are you using, maxed all your credit cards? Want another one? Think again.
- Whether you are registered on the electoral roll.
Now remember your credit rating is also affected by factors not in your credit report….. At the point of application, the following factors will also play a part:
Top Factors not in Your Credit Report that Affect your Credit Rating
- Your Employment Status – how are you going to pay for finance or credit without a job, so this is why you could have a credit rating of 999 from Experian, and still be rejected instantly.
- Your Salary – you could have an Equifax Credit Rating of 900, but if your salary is below the required threshold, that credit card or loan is out of reach.
- Homeowner? Lenders see homeowners, as more stable, and a reduced risk as they could seize this asset in a worse case scenario.
- Your history with the lender, can be a good or a bad thing, if you have a poor credit rating overall, but have been responsible with the lender, you want a further product from, this can help.