Credit rating and credit checks

What is a credit check?

A credit check is carried out when an individual applies for finance such as credit cards, mortgages loans, etc. This involves the providers to look at your credit history and assess whether or not they will lend to you and whether you are capable of repayment.  A good credit rating or score, as it’s also known as, is very important for providers to lend to you.

How is credit rating information compiled?

Credit card providers use a range of information to make their decision on whether to accept you on their credit card program. Equifax and Experian are to companies where this information comes from; these companies are known as credit reference agencies and they hold vital information about you.

Below is a list of information credit card issuers use to compile your credit rating:

• Previous history with the company
• Initial application
• Information from Credit Reference Agencies
• Court records
• Information from the electoral roll

You may think that there is a lot of personal information exposed to check your credit rating but on the other hand, there is still a lot of information that credit card provider don’t know. The following list shows this:

• Savings accounts
• Medical history
• Fines
• Relatives information
• Student loans
• Missed payments
• Criminal record

Check credit rating yourself

It is possible to check your credit rating or credit score yourself from the credit reference agencies mentioned earlier. Usually these agencies can provide a free 30 day trial and you just need to sign up and they will provide you with the information you need.

Click for a Free credit report from Experian

Maximising your chances

You can always improve your chances of getting a credit card accepted. Make sure the following information is taken on board:

• Set up direct debits for your existing credit card repayments if any, as missed payments can harm your credit rating/score
• Cancel unused credit cards as they may hinder future applications for getting credit
• Sign up to the electoral roll for your home address
• Only apply for credit cards that are suited to you as the best cards are only available to people with the highest credit ratings. Every application is noted on your credit file whether or not you get accepted as this could have an effect on your credit rating.

If you think that you are financially in turmoil then free advice is available from your local Citizens Advice Bureau. You can also get help from the Consumer Credit Counselling Service on 0800 138 1111 and the National Debtline on 0808 808 4000.