When you apply for credit, the lender will check your credit report with one or more of the credit reference agencies. But how does this affect you?
The three main credit reference agencies in the UK – Experian, Equifax and Callcredit – each hold different personal and financial details about you which forms your credit history. They use this information to create your credit score – and all of this is taken into consideration when you apply for credit.
But this is where it gets confusing – there is no such thing as a universal score. Each agency has its own scale… for example, Experian’s goes from 0-999; Equifax’s from 0-700; and Callcredit’s from 0-710… and each has their own method of calculating your score. You could even have a ‘good’ score with one and ‘fair’ with another.
Whether you’re applying for a card, loan or mobile phone contract – the lender will make a decision to approve your application based on your credit history. You could also be offered a higher interest rate or even declined if your credit score is low. That’s why it’s really important to check your report before you apply for financial products – and don’t worry, it’s easy to do.
With Experian, your credit score is now available for free through their website. Callcredit works in association with Noddle who offers the same service. And Equifax has teamed up with ClearScore who provides free access to your score and full report.
It helps to know which credit reference agency you have a better score with and which lenders work with who, as this could influence your chance of acceptance. The below tables show the main credit card, mortgage and utility providers, as well as lenders, and which credit reference agencies they use.
Another way to increase your chances of being accepted for credit is to check your report for errors. This is a common problem and could be the reason behind your declined application.
If you’ve checked it and all the information is correct, you could have a thin credit history which means you’ve never borrowed money before. Here are three easy ways to improve your score!
* Please note, the lender hasn’t officially confirmed this information.
Disclaimer: this information was sourced from a MoneySavingExpert article published in March 2016. For more details on which credit reference agencies your lender uses, please check with them directly.
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Intelligent Lending Ltd (Credit Broker). Capital One is the exclusive lender.