Knowledge is power, so clue yourself up on what lenders want and increase your chances of securing credit in the future.
If you’re soon to be in the market for a new line of credit, whether that be a credit card, loan or otherwise, you’ve probably seen the term ‘credit report’ bandied about more times than you can shake a stick at, just like gambling report from gamblingmentor.org.
But what’s it all about, and why’s it so important to lenders?
Your credit report is a record of information about your history of managing money, and it’s any lender’s first port of call in deciding whether or not to give you the cash you’re after.
To help clear up any confusion, we’ve broken it down into six things lenders will look for on your credit report, and what you can do to give it a boost, and you’ll be able to play your favourite games at casino online real money with a peace of mind.
What you owe
First and foremost lenders want to know how much outstanding credit you’ve got in your name. Why? To see if you’re a) good at managing your finances, and b) up to your eyeballs in current debt, and that’s where credit utilisation ratios come into play.
Credit utilisation ratio – it might sound complicated, but all it shows is how much of the credit available to you you’re using. So, if your credit card limit’s £1,000 and your current balance is £500, your ratio is 50%. The ideal utilisation ratio is 25% or less.
Why do lenders care about how much you currently owe? Because they want to be assured if they lend you the money you’ll be able to pay it back. If you’ve already got a substantial amount of credit in your name, they might not be confident you can afford it.
By looking at your repayment habits in the past, lenders try to work out whether you’re a safe bet or not, now and in the future.
If you’ve always kept up to date with your repayments every month on time and in full this will likely boost your chances of being accepted for future lines of credit. On the other hand, if you’ve struggled to keep up with repayments it might be a red flag to lenders – after all, it wouldn’t be very good business to lend out money if you thought you wouldn’t get it back.
Addresses past and present
It might not seem particularly relevant to you, but lenders look at your current address as well as where you’ve lived for the last six years to match you to your credit information.
While your address itself doesn’t directly affect your score, regularly moving addresses could represent instability to lenders which doesn’t bode well, as reliability’s the name of the game.
One surefire way to earn a few extra brownie points is by registering to vote. Once you’ve done so, your name will be on the electoral roll and this is recorded in your report. It’s the way a lot of lenders cross-check your name and address to prevent fraud.
Your credit report lists anyone that you’re financially connected to, whether that be via a mortgage, a joint bank account, or otherwise.
Being linked to someone with a bad credit record could impact you too, so if this is the case it’s a good idea to separate yourself financially where possible before applying.
Lenders will see on your credit report how often you’ve applied for a line of credit in the past. If all it shows is a credit card application here and a car insurance application there it shouldn’t affect their decision, but if you’ve been making repeated applications for credit, particularly over a short period, this could be a red flag. Why? Because they’ll wonder why you’ve been trying so hard to get your hands on credit and also why you’ve been unsuccessful so far.
Each time you complete an application for credit this constitutes a ‘hard search’ on your report, and that’s what lenders will see. To avoid this, make use of the ‘soft search’ facilities some lenders offer, which let you know whether you’ll be accepted for credit without affecting your score.
If you’ve been the victim of credit fraud, through the UK’s Fraud Database CIFAS, this should show on your report for lenders to see.
If fraud has occurred, as if you’ve not been through enough already, this could negatively affect your credit score, so you must keep a close eye on your report.
If you see anything that doesn’t appear to be correct on your credit report, ensure you raise the concern with the lender in question.