What is a Credit Score and Why Does it Matter?
This one comes from David in Newmarket, and his question: “What is a credit score?”
A credit score is a third party assessment of your ability to handle liability (li-ability), and is usually required and produced to assess applications for things like loans, credit cards, mortgages, mobile phone contracts and store finance. Download the free help sheet for the latest help!
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Simon, began his working life with Messrs. Coutts & Co, bankers to the Queen. During a career which has, thus far, spanned 29 years, Simon has served time as a Bank Manager, Financial Adviser, and General Manager of a major UK Broking Firm, which later became London Scottish Broking. A Certified Mortgage Specialist, Simon set up his own broking firms in late 2002... Find out more about Simon
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The Outline Solution
The following broad areas of assessment are usually taken into account:
- Stability of Home Address
- Stability of Employment
- Ability to Pay
- Previous Payment Demonstration
- Social/Economic Demographic
Ratings for each area are then added together and in some cases are weighted, depending who you have applied to, the particular institution’s past experiences, and their target market.
Possible Arguments Against You
- Different institutions may score/rate you differently: they will weight different elements of a client profile, and the weighting generally depends on the type of customers they wish to do business with.
- Companies are not obliged to use credit reference agencies, but a lot of them do, because they can access a large and varied quantity of information.
- Credit Reference Agencies, publish the information supplied to them by subscribing companies. It is possible for errors and misinformation to adversely and wrongly affect your score.
The Almost Legal Info
You can obtain a Statutory Credit Report from any of the major Credit Reference Agencies by sending them a cheque for £2.00.
In truth a score is not ‘your’ score. It is their assessment of you!
The main Credit Reference Agencies are
- Experian (‘Credit expert’)
Need More Help?
Ultimately, it starts with you. If you want to improve your credit score in the eyes of the main reference agencies; you’ll be interested to learn that we’ve put together a detailed guide to not only help you understand how the scoring system works, but also, how to positively affect your score; please go to… http://youandyourcash.com/what-is-a-credit-score-and-why-does-it-matter/