#SupaTips -Credit Report

19-12-10 11:32

What is a credit report?

In simple terms, your credit report is a tool used by lenders to determine if you qualify for credit such as loans,mortgages or similar services. It helps to indicate what kind of borrower you are; if you would be a risk or if you’re likely to manage your repayments. Your credit report contains information such as your personal details, credit account history and public records. When applying for credit, you are giving lenders access to your credit report – this is a part of the application process they use to determine your eligibility. All lenders have different requirements and so they assess your score based on their own criteria. They will set a minimum that you need to reach in order to qualify for your desired amount of credit.

What is a credit score?

All the data on your report contributes to the calculation of your credit score, which is just a number that shows lenders your creditworthiness. Typically, credit scores range from 300 to 850 and the higher your score, the more likely you are to receive credit from lenders. Behind the number itself, there are some main factors that are considered during the decision-making process and therefore it’s important to know what affects your score so that you can stay in control of yours and even make improvements over time.

What is considered a good or average score?

There is no specific number that will guarantee you approval. Also, due to different lenders having different requirements – you could be refused by one company and accepted by another with exactly the same credit score. Also, different credit rating agencies calculate scores in different ways, giving different results.However, most companies view a ‘good’ score as being somewhere between 881 and 960. A ‘fair’ score could be 720 to 880.

How does my credit score affect my ability to receive credit?

Your score, along with the information in your credit report are key ingredients in determining if you are eligible for credit such as loans, credit cards and mortgages. Overall, higher scores reflect a better credit history, making you suitable to receive loans with lower interest rates.

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• Short term loans are expensive and should only be used for short term borrowing, and not as a long-term solution.

• If you are thinking of consolidating existing borrowing, you should be aware that you may be extending the terms of the debt and increasing the total amount you repay.

• If you choose to secure a finance option against your home, your home may be repossessed if you do not maintain your repayments. Think carefully before securing other debts against your home.

Make sure you understand the costs before you apply. Please only apply for a loan if you're sure that you can repay it in full on your due date and still manage your other outgoings. Missing repayments may have a negative effect on your credit rating and make it more difficult for you to obtain credit in the future.

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