The fact that there’s no such thing as a ‘universal’ credit score might make this a bit of a strange question.
The thing is, each lender and credit checking service will look at your credit history but judge it based on their own criteria. So it’s impossible for us to tell you what makes the ideal credit score – or borrower.
However, lenders don’t actually see your credit score. When you apply for credit, whether that’s a credit card or loan, lenders will look at how well you’ve managed your repayments in the past. If you’ve previously struggled, you’re likely to be viewed as a risky borrower, which can put lenders off.
You’re scored differently
While your credit score is useful to track month by month to see if there’s an improvement, it’s not what determines whether your application for credit will be accepted.
The three credit checking agencies (Experian, Equifax and Callcredit) score you out of different totals. So you’ll find, for example, that your credit score on Experian will differ from the score you’re given by Callcredit.
This is why it’s important to look at your credit history as a whole, rather than just the score. Here you can see if there’re any negatives on your report. It’s these negatives that can trigger lenders to reject your application.
Things to look out for include late or missed payments, defaults and CCJs (County Court Judgements). These marks will show up on your report for six years or so, and will make borrowing during this time difficult.
If you do have negative marks on your credit history, it doesn’t necessarily mean your application will be rejected. It all depends on the individual lender. It may be that you’ll be accepted at a higher interest rate, and if it’s a credit card you may receive a lower credit card limit.
Improve you credit history
So how do you make sure your credit history is in the best shape?
Other than considering how you’ve managed your payments in the past, lenders may look to see how many lines of credit you currently have open. It will depend on the lender, but having credit already available to you may sway them to turn down your application as they consider whether you could afford your repayments if every line of credit open to you was maxed out.
There are other things to consider if you want a flawless credit history. Make sure all your personal details - in particular your address - are up to date. And if you’re not on there already, you should sign up to the electoral roll. This helps lenders identify you, which can help with your application.
Checking your credit history is simple. The great news is there are credit checking services available that let you check your credit history for free.
While checking your credit history before you apply for credit can give you an indication of whether you’ll be accepted or not, it’s worthwhile checking it regularly regardless of if you plan to borrow.
This way you can make sure all the information is up-to-date and that there are no errors. Mistakes on your credit history could affect your application to borrow, so it’s important to get them corrected.
When you apply
When you apply for credit, don’t apply for every offer you see. Each application you make will leave a footprint on your credit history, which future lenders will be able to see. Even if your application has been rejected, this will be visible on your report.
Lots of applications made in a small window of time can give the impression that you’re desperate to borrow. This could result in you being turned down again, so take the time to carefully consider which products are most suited to your circumstances. That way you should keep your applications to a minimum.
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