Jon's Blog

Practical tips to help you improve your credit rating and avoid expensive high interest loans

Your Credit Score Explained

Pie Chart Descriping Credit Score

Your credit score is a number that the credit referencing agencies put against your credit file for lenders to quickly assess how good ‘worthy’ you are to lend to or not!

In the ‘good old days’, to get a loan you would meet the bank manager and they would make their decision to lend based on many factors, tiyr credit score being only one.

Though in today’s world of ‘automation’ and minimising costs, lenders rely heavily on credit scores as a major way of deciding whether to lend or not. Your credit score is like an exam grade; so:

The higher you score – the greater the number of lenders who are likely to grant you a lower interest rate loan.

The lower your score – you will be more restricted to ‘bad credit lenders’ who are more expensive.


What Your Credit Score Means

Experian provide a good explanation in the graphic below:

 

Explanation of credit score

The score you need for a loan will vary depending on the specific lender; though many lenders do not just look at this, they will also look at your credit history to see if it looks acceptable to them.


The Make Up Of Your Credit Score

Pie Chart Descriping Credit Score

Your score is made of 5 categories:

  1. Record of paying your bills on time (payment history) – the more history you can show making payments as you should, the better your score will be
  2. Total indebtedness – how much you owe in total does affect your score, especially if they are balances being run on credit cards.
  3. Credit mix – if you have a good mix of credit all with a good payment history this looks good and helps your score
  4. New Accounts and Credit Requests – if you make lots of applications without taking out new agreement, this looks bad and can reduce your score
  5. Length of credit history – in the UK we can only see back 6 years on your credit file, but the longer you credit file is showing good payment history over a range of credit agreements, the better.

For hints and tips about boosting your score, check out the following Money Saving Expert article: Credit scores: Boost your credit rating – MoneySavingExpert

The Money Advice Service explores in great detail in the following article: How your credit score affects the cost of borrowing


Do you know what your credit file looks like?

To check the current level of your credit rating to see which options are available, we strongly recommend heading over to the Checkmyfile website to view the UK’s only multi-agency credit report.

Once there you will have the option to sign up for a one off FREE 30 day credit report. To view your one off 30 day FREE credit report, please click here. Alternatively, if your FREE period has expired, you can order a comprehensive credit report for a one-off payment of £19.99 by clicking here.


Loan options

Unfortunately, if you have sub 600 poor credit score, apart from friends and family, it is only the ‘poor credit’ lenders that are available for a loan.

As you have probably guessed, we are a loan broker and specialise in online guarantor loans. We have included a lot of information on our site to help you to decide whether or not this is the right type loan for you, as well as a compare loans page to quickly browse the various options:

Screenshot of compare loans page

Jon Edward
Jon Edward
Passionate about helping people find options, when on first glance there do not appear to be any.

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