A lender’s credit scoring system allocates
points for each item of relevant information, such as whether you
are a homeowner (and for how long), your employment status, income
and history of handling debt, and adds these up to produce a
score.
If your score reaches a certain level, then
the lender may agree to your loan request. If you do not score
highly enough, your application may be rejected.
Lenders generally have their own points
system, although sometimes scores are calculated by credit
reference agencies and these may be used by lenders.
Keep in mind:
Lenders are not obliged to accept an
application, but a refusal does not necessarily mean you are marked
down as a bad risk. It simply means that based on the information
available, the lender is not prepared to lend you money at that
particular time. It may be that you do not fit the profile of the
potential customers it is trying to attract.
However, lenders have different lending
criteria and scoring systems, and so an application to another
lender might prove successful. A refusal might be due to a recent
change in your address or employment status.
Lending decisions are not allowed to be made
on the basis of race, gender, disability, colour or religion.
A credit reference agency holds a large amount
of information on individuals, which it takes from a variety of
sources, such as banks and building societies, credit card
providers, retail stores, hire purchase companies and mobile phone
operators.
It also holds information from the law courts
and the electoral role which will show whether you have any county
court judgments or are a declared bankrupt, and that you are a
council taxpayer.
Credit reference agencies are required to
comply with the Consumer Credit Acts and the Data Protection Acts
with regard to the nature of the information they are allowed to
hold on individuals.
Each time a search is requested by a lender it
will be noted on your credit file and disclosed to potential
lenders in future credit checks. A lender should always inform you
if a credit reference check is being carried out, and you should
also be told if information about you is to be stored with a credit
reference agency.
Keep in mind:
If you have had no previous credit
problems, a credit check should be very straightforward and
you should be eligible for the majority of unsecured loans.
However, if you have no credit history at all
and this is the first time you have applied for a loan you may
encounter problems with some lenders as they may prefer
applicants with a track record of being able to handle debt
responsibly.
Yes, you can obtain a copy of the information
held by a credit reference agency by writing to any of the
following (or by applying online) for a £2.00 fee.
Experian
Consumer Help Service, PO Box 8000
Nottingham, NG1 5GX
Telephone: 0870241 6212
http://www.experian.co.uk/
Equifax
Credit File Advice Centre, PO Box 1140,
Bradford BD1 5US
http://www.equifax.com/
Callcredit
PO Box 491
Leeds LS3 1WX
http://www.callcredit.co.uk/
Credit reference agencies should inform you as
to how you can rectify any information that is incorrect.
If you dispute any information on your record,
the credit reference agency will flag it as unreliable pending
further investigation.
However, the quickest way to rectify it is to
write to the organisation that supplied the incorrect
information, asking it to correct it. You can also ask the
organisation to correct your data with all three credit reference
agencies.