What Are Credit Scores?

Like us, you are curious as to what a credit score is and how it is calculated and used. right? 

A credit score is a measurement of points used by finance lenders to help determine whether you qualify for a particular financial products such as a credit card, loan, or in our case car finance

Everybody that has ever applied for credit has a credit report. Lenders use the information on your credit report and any additional information you supplied during an application, to calculate a numerical score that represents your credit history. This helps to indicate what kind of borrower you are, and how likely it is that you will manage your repayments. You score positive points for making payments on time. Not using all the credit on your credit card and even for registering as being on the electoral roll!

How do credit scores affect me?

Your credit score will play a key role in your your life if you ever choose to take out financial products. For example, when applying for a credit card or mortgage, your credit score could be used to help determine whether your application is accepted and what you end up paying.

People with a higher score are often seen as lower risk and more like to full repay the borrowed amount, which means lenders are more likely to give them credit.

However, Your credit score is only a guide. Every lender follows a different policy for credit scoring. So, if you don’t meet the criteria of that lender, you may still be able to get credit from someone else.

If you are unsuccessful, you should always ask for the reason you got turned down by a lender so that you can identify what you need to do to get credit in the future.

Things that affect your credit score.

You should also be aware that too many credit searches in a short time period may be viewed negatively by lenders.

Your credit score is based on your credit report.There are lots of factors on your credit report can cause your credit score to change, some of these include:

• How much of your available credit you’re using and your total outstanding debts
• Your history of credit account payments. (Have you missed any and how recently did you miss them)
• The number of recent Credit searches (these happen when a credit application is made – for example, when you apply for a credit card or a loan etc)
• Public records that contain your data  (electoral roll and county court judgments (CCJs))

How to manage your credit score.

• Review your credit report and score on a regular basis to ensure that the information is correct. There are a number of free services available that allow you to see and manage your credit score.
• Ensure you pay bills on time and don’t miss any payments
• Settle any County Court Judgements (CCJs) if they are outstanding.
• Register on the electoral roll