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Your credit score is used by lenders to determine not just
your eligibility for financial support, but the overall borrowing
costs you can expect to pay. Prior to issuing vehicle
finance, lenders must evaluate the risk level of each
agreement for their own protection.

The Credit Report Explained

UK Car Finance
25, May 2019

In most instances, major lenders begin (and often end) the underwriting process by looking at the applicant’s credit report. Hence, credit scores are single-handedly determining the outcome of millions of applications for credit on a daily basis.

So it is hardly surprising that the once unheard-of credit report has become such a maligned and resented ‘demon’ for households across the UK. Nevertheless, getting to know the whole credit score system could hold the key to taking better control of your financial future.

What Are Credit Reference Agencies?

In order to assess your eligibility for credit, lenders use one of the three major credit reference agencies to check your credit score – Callcredit, Equifax and Experian. Your credit report contains a variety of details documenting your financial activities over recent years, providing a cross-section snapshot of how responsible you are as a borrower.

For example, information stored on your credit report may pertain to the number of credit cards you have, your credit limits and current balances, late or missed payments, your current and previous registered address, bankruptcy data, county court judgments against your name and so on. Your credit report will also indicate your full name, your date of birth and residency status – all used for fraud detection and prevention purposes.

It’s also worth noting that every UK consumer has the right to check their credit report at any time. By taking note of any damage and discrepancies you come across, you’ll be in a far better position to do something about them.

What Information Does a Typical Credit Report Include?

When a lender accesses your credit report through one of the three major credit reference agencies, they’ll be presented with various details such as:

  • Your name, address, date of birth and residency status.
  • Details of all your current accounts and debts, including mortgages, credit cards, utility bills, bank accounts and so on.
  • Your track record regarding on-time payments
  • Payments and obligations you’ve missed or delayed
  • Your total outstanding credit balance, itemised between the different lines of credit
  • The amount of spare credit you have available
  • How long you have held your accounts
  • How often you apply for credit and application volumes
  • Whether you appear on the electoral roll
  • Information regarding bankruptcy declarations and CCJs
  • Debts registered against your name at previous addresses
  • Whether you have fallen victim to fraud
  • History of name changes and maiden names
  • Individuals you hold joint accounts with

Does My Age Affect My Credit Report?

Contrary to popular belief, your age doesn’t necessarily have any impact on your credit report. Instead, lenders are more interested in your current circumstances and your financial history.

Of course, lenders are often hesitant to issue longer-term loans and lines of credit to older applicants. You may therefore find it more difficult to qualify for credit after reaching the age of 70 or 75. Nevertheless, a good retirement income combined with home ownership and plenty of savings can add up to an impressive credit score for older applicants.

How Important Is It to Build a Strong Credit Score?

Short answer – extremely important. It’s very difficult to get through life without seeking financial support from time to time. Now more than ever, major banks and lenders are scrutinising applicants exclusively on their credit reports and making decisions accordingly.

Maintaining a good credit score can be tricky, but can also be simplified by following these five important tips:

  1. Ensure your name appears on the electoral register as soon as you turn 18
  2. Never miss or delay payments under any circumstances
  3. If you anticipate a missed or delayed payment, inform the creditor ahead of time
  4. Never take on additional debt unless absolutely necessary
  5. Pay off as many existing debts as you can and live within your means

If you’re unsure about your eligibility for an affordable vehicle finance package, we’re here to help. PoorCredit- CarFinance.co.uk can arrange a ‘soft’ credit check on your behalf, which irrespective of the outcome won’t impact your credit score.

For more information or to begin the application process today, contact a member of the team at PoorCreditCarFinance. co.uk!
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