credit score basically lets someone who might lend you money know how likely you are to pay it back. It is used by lenders, such as banks and credit card companies, to work out how risky it is to lend money to people.
Usually, the higher your credit score, the better it is and the more likely you are to get a loan. If you have a low credit score, you will find it much tougher to get a loan. However, some lenders may have their own way of working out a credit score so it might be best to ask them to find out.
You will get a poor credit score if you don’t pay loans back, max out your credit cards a lot, and make lots of applications as well as a host of other reasons. One of the best ways of getting a good credit score is to pay off loans on time or sooner. For more tips on how to improve your credit score, check out the relevant page of this site.
There are loads of ways lenders can work out your credit score but one of the main ways is with info from your credit report, which is basically a list of lots of different details that may affect your credit. This comes from two main places:
- Public records if you’ve been bankrupt, electoral roll information, if you’ve been taken to court because you owe money, individual voluntary arrangements (an agreement with you and the lenders to pay back just what you can afford), etc.
- Info from financial institutions and lenders credit accounts, credit applications, financial associations, mobile phone companies and gas, water and electric companies etc.
As well as your credit report, other things may also count towards your credit score, such as the details you give when you apply for a loan. You can get a copy of your credit report from credit agencies Equifax and Experian. It’s worth speaking to them as credit reports and credit history can get quite complicated.
For more information on credit scores, don’t hesitate to contact us.