Credit ratings are used by lenders to rate how likely you are to fulfill your financial commitments like repaying loans or credit card bills. They are based on a number of different factors including your previous dealings and financial habits. Lenders use credit ratings and credit scores to decide whether to lend you money and, if so, how much.
Your credit rating will be based on information provided to lenders by credit reference agencies. The main agencies are Experian, Equifax and CallCredit.
They assess your ‘credit worthiness’ by looking at factors such as your:
- history of borrowing and repayment
- financial assets or liabilities
- electoral roll information
- any County Court Judgments (CCJs) you have against you
It’s important to know that there is no such thing as a universal credit rating – the way one lender interprets your credit worthiness may be different to another. So if you’re rejected by one bank, it’s very possible you’ll be accepted somewhere else and vice versa. However, applying to multiple lenders at the same time may impact your rating.