To be eligible for a loan, you have to be over 18 years old and in employment. Lenders have what is known as a credit scoring system and based on the information you provide, the lender will assess your application and their system will determine whether you’re granted a loan.
We all have a credit history. Your credit history is based on the handling of your financial dealings. Credit reference agencies hold data on each individual which is shared with other credit reference agencies. The primary purpose of this is to prevent fraud. However, this information is available for any lender to access on application of any credit facility. All your credit accounts will be listed on your credit history over the last six years. Any credit agreement and arrangements you may have with utility companies will show up on your credit file and whether your account is satisfactory or in default. Your credit score will be based on the information on file. It is now possible to access your credit file online and before making a loan application, it is wise to check the information held on your credit file is correct to increase your chances of success. Bear in mind, that all lenders have their own internal lending criteria and scoring system, however, checking your credit file does give you the opportunity to amend any incorrect information held on you.
Data sharing is increasing and this is due to the amount of identity fraud now being committed. All lenders share information with other lenders and credit reference agencies to highlight any fraudulent activities. Therefore, repeated loan applications over a short period of time can have an adverse affect on your credit score. Loan applications do affect your credit score so don’t place lots of applications over a short period of time. Two at any one time is understandable, but it is wise to leave a few months between applications.
Checking your credit file and building up your credit history and score is vital to being accepted for a loan. To have any chance of success, you will need to have a good credit history. Having none can have a detrimental effect on a lender’s decision. It’s almost a guarantee for a rejection letter. Be prudent and ensure your total credit used is not more than fifty per cent of your maximum available credit. This gives lenders a good indication that you’re not over committing yourself and you have the financial means to be able to repay any loan you may be offered.