If you are applying for credit, such as a cash loan, mortgage or credit card, then it may be a good idea to check your credit score first. Checking your credit score allows you to make sure the information on your credit file is correct. Even small errors can cause problems with a credit application.
What is a credit score?
A credit score is a score based on the information provided on your credit report. It is used by companies to make decisions on whether to give you credit and how much credit to give you. Your credit score is calculated by the credit reference agency providing the report. There are three main credit reference agencies in the UK:
● Experian
● Equifax
● TransUnion
Lenders will use the information provided by one or more of these agencies to decide whether to offer you credit.
How can you check your credit score?
All three credit reference agencies allow you to sign up for a 30-day free trial which allows you to check your credit score and the information they have on you.Though, you may need to remember to cancel the subscription before the end of the trial period or you may be charged.
You can also check your credit score using services such as ClearScore, who have partnered with Equifax to give you free access to your report.
What if you have a low credit score?
If you have a low credit score, then the first thing you should do is check that all the information on your credit report is correct.
● Check your personal information and address
● Make sure that all the bank accounts, loans and credit cards listed are correct
● Raise any unfair or incorrect defaults with the agency
● Check you don’t have any joint accounts linked to previous spouses or partners
If all information is complete and you still have a low credit score, then you may be refused credit from some providers.
The good news is that it may be possible to get a loan even if you do have a low credit score. This is because all lenders base their decisions on their own set of criteria. Just because you don’t meet the criteria for one lender, doesn’t mean you won’t meet the criteria for another.
It is important not to apply for credit from several providers in a short space of time as this could affect your credit score. If you have been rejected, try and build up good credit before applying again. Reduce any debt that you have, cancel unused credit and store cards and make sure you keep up to date with paying your bills.
If you've found it hard to get a loan because of bad credit - Morses Club may be able to help. Once you've been accepted for a loan you're free to spend the money however you need to.
