Credit Score

Credit Scoring may be done each time you complete a loan or mortgage application form. This may be the paper form you fill in and return in the post, or the form which the provider fills in from the answers you give over the phone, or the application form you submit online.

Points are scored for each answer you give and the number of points scored helps the lender decide whether or not to give you the loan or credit card. Typically, depending on the type of loan, the form will have questions about your income, the length of time you've lived at your current address, the credit cards and bank accounts you may have.

Credit scoring is one of the ways lenders use to decide on the applicant's creditworthiness. Based on the score (and data from credit reference agencies) the lender may decide to provide the loan in full at the agreed or advertised interest rate, accept the application but for a lower amount or at a higher interest rate, or in some instances they may just decline the application because they consider the risk of payment default too high.

Besides credit scoring the lender will usually refer to public records and credit reference agencies to get access to your credit history: CCJs; credit checks made by other lenders; other loans you have and your payment history. Too many credit checks can negatively affect your chances of getting a loan. To find out what is in your statutory credit file you can contact one of the main credit reference agencies in the UK like Equifax plc or Experian Ltd and for a small charge they will send you a copy of your file.

If you have been refused a mortgage, loan or credit card you can, within twenty eight days, write to the lender who declined your application to ask for the name and address of the credit reference agency which provided the data. You can then check your credit record to make sure they have not made a mistake and if there was a mistake you may be able to get it corrected.