Credit Agreements: What Do Lenders Really Look At?
Ah, the mysterious credit agreement process – and the equally enigmatic credit score. Rumours abound as to how your credit rating is actually formulated, and what information has the most impact, but at least we can all agree on one thing: it’s a tool used to judge your attractiveness as a candidate for credit, based on your financial history and previous behaviours (for more information about credit scoring – and how to enhance yours - feel free to check out our blog: ‘Six Easy Ways to Improve Your Credit Score’).
Whilst it’s important to be aware of what lenders know about you when you apply for credit, every lender scores a candidate differently – and they draw on lots of different data. In this blog, we’ll take a closer look at some of the information that might be deemed relevant, to help you present yourself in the best possible light.
As obvious as this might sound, triple-check all the vital stats you enter on your application. These might include: your postcode; whether you’re renting or own your home; why you’re applying for a loan; what your salary is… all of which are very important details. Just putting a slightly different job title down or missing a zero from your salary can make a big difference!
Consistency is key. Fraud-scoring firms filter applications - and if information is entered slightly differently and thus doesn’t match up with other records it can cause issues.
Your Credit File
Most lenders use one of the big credit agency reports – documents from Equifax, Experian, TransUnion or the Channel Islands Data Service – during their assessment process. The extent to which these credit reports impact their decision making varies from lender to lender, but it’s still something to be mindful of.
Equifax, Experian and TransUnion populate their credit files with data from various sources, as follows:
Account data. This comes from various organisations – like banks and utility companies – and paints a picture of your account behaviour (whether you’re in debt, how much money you owe, how good you are at paying on time, etc.). Around 350 million records are tracked per month.
Search data. This shows which other lenders have searched your file when you’ve applied for credit. It’s useful in a number of ways (such as displaying how many credit applications you’ve made – too many could spark concerns about your money management).
Address and linked data. This includes the addresses or people that you’re financially associated with.
Electoral roll information. This information is publicly available and is added to credit files except for if you live in Jersey and Guernsey (local authorities don’t provide electoral roll information to credit reference agencies automatically). If you’re a Channel Islands resident, you’ll want to amend this before applying for credit – it can be harder to get approved for a loan if you aren’t seen to be registered on the electoral roll.
Court records. If any court orders have been made against you, such as county court judgements or bankruptcies, these will be noted in your credit file.
Data from other lenders. Certain lenders (such as doorstep lenders) are legally obligated to share any data they hold. Payday loan data is also normally reported.
Fraud data. If you’ve committed fraud, or someone else has committed identity theft and committed fraud under your name, this will show on your report (under the CIFAS section).
Energy/phone data. Many providers now share data. In addition, whenever you switch, utility companies tend to perform a hard credit check, leaving a ‘footprint’ on your report.
Cherry Godfrey: A Holistic Approach
If the above sounds a little scary – what if there’s a ‘black mark’ against your report that you didn’t even know about and it means your application will be refused? – don’t panic. Not every lender will view you as a number on a list and dismiss you without considering the individual merits of your application. At Cherry Godfrey, for example, we offer bespoke lending. This means we take each customer’s circumstances into account, working hard to find a solution that works for them without any danger of over committing.
Circumstances are rarely identical – in life or business – so it’s surprising that many finance providers create ‘off the shelf’ solutions or simply direct customers to use an impersonal internet platform. The Cherry Godfrey team believe in people. We live on the same island you do; we enjoy meeting you and getting to know you, creating a thorough profile that really reflects your many qualities, not just the numbers in your credit score; and we enjoy generating finance solutions specific to your situation.
Our approach is holistic and considered, with options designed to meet the needs (and circumstances) of each individual customer.
If you’d like Cherry Godfrey to find a way forward for you, don’t hesitate to contact us today. Our friendly, expert team focus on solutions, not problems – and we really look forward to helping you secure the credit you need, when you need it.