Credit Report and Score

The current recession has affected all of us in some way or another. We all know of a friend or family member who has just lost a job and can no longer meet their financial obligations. This is a serious worldwide problem and it is here to stay for quite sometime. A considerable large amount of people are applying for credit and more people are being refused! A well known bank recently announced that they were rejecting about 50% of credit card applications.

By understanding your credit report and score you will be able to understand how lenders view your report and manage your current or future credit applications. You will realize how important it is to keep your accounts up to date. If you are struggling with your repayments you should always talk to your lender.

When you are applying for a loan or credit, a lender will look at your credit report, plus all the information from your application form and generate a credit score. This score predicts the risk involved in granting you credit. Each lender has a different formula in determing your credit score, and will change depending on the type of credit you are applying for. Every credit report can generate a different credit score. A credit score is used to determine how likely you are to repay a loan and make the repayments on time. The scoring system ranges from 0 to 999, the higher your score the easier it will be for you to apply for a loan or credit. That is why it so important to know your credit score, as you can  then start improving it. A credit report and score changes over time, as with your information on your credit history and on your credit applications forms.

Lenders do not have to tell you how they work out your credit score, but they should give you a basic explanation on how their scoring works. They should also tell you whether your application has been refused because of your credit score and whether that involves the information on your credit report.

A credit report allows lenders to evaluate how much they will borrow to their clients and lets good borrowers benefit from cheaper lending ! Your credit score will affect the rate you are offered on a loan, credit card and mortgage.