Understanding Your Credit Rating

Your credit rating is important. As most credit providers will review your credit file as a part of their application process, the effect of having a poor credit rating is substantial; it could mean you find it very difficult to secure credit. While there are credit providers who specialise in bad credit loans, the cost of these products are generally very high when compared to more mainstream loan options.

Many people with a poor credit rating describe their position as being in “credit prison”. This is because they are unable to obtain credit and therefore unable to achieve their financial goals.

credit rating

Credit checks can be an automated system

Many lenders will gather the data from your credit history and place it into their credit models when judging your loan application. Every lender will have their own credit model developed, meaning you won’t know what credit score they are looking for. This almost automated system can make it near impossible for people with a bad credit rating to secure the best loan for their needs.

credit rating

What are lenders looking for?

When conducting a personal credit check on you, loan companies will be investigating your previous credit history. They will be looking for things such as your payment record, number of other credit applications, how often you change address, whether or not you are on the electoral roll, etc. Each creditor will use different credit scoring techniques to assess your application.

Credit footprints

Simply by conducting a credit check on you, lenders are already having an impact on your credit report. When a credit check is carried out, a ‘footprint’ is left on your credit report. This credit footprint indicates which lender has conducted a search on your credit file and when the search was carried out. These credit footprints are held on your credit file for a period of five years.

The negative impacts of credit footprints

Generally speaking, if lenders see a large number of credit footprints on your credit report over a short space of time, they will consider you to be a higher risk borrower. It is therefore in your best interest to improve your credit rating before you apply for loans and risk being rejected.

 

How can Clean Credit help?

Clean Credit specialises in helping people remove negative credit items from their credit files, such as defaults and judgements. Through this process, Clean Credit can help you restore your credit rating, allowing you to secure credit once again.