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How your credit file affects the loan you get

Your credit file and score affect the loans you get, how exactly is a slightly difficult question as all lenders have different methods of scoring which are not known to the public. One thing we know for sure is that the health of your credit file and score will impact heavily on the interest rate you are offered.

This of course varies on a cases to case basis as with secured loans, the asset is usually the defining factor and there are other factors outside of the credit score and file which carry weigh in deciding how much interest rate or the type of loan you will get. Your financial affordability for e.g Can you afford the loan, the deposit for the loan, the monthly mortgage repayments, do you have a stable job with a steady and stable income.

So what is a credit file or record?

Your credit file or record is a collection of data collected by the credit bureaus about your creditworthiness. This data is collected from your bank, lenders utility providers, debt providers and the government.

The data includes

  • Payment history for each active account including duration, number of payments, amount of payments

  • Your name, past addresses and date of birth

  • If you have any bankruptcy, CCJ or voluntary arrangement

  • The number of searches carried out on your and by who

So how does your credit file affect the loan you get?

When you apply for a loan the lender will check your file for a variety of factors including

  • How many missed payments have you had

  • How many addresses have you had in the past

  • How many searches have there been on your credit file recently

  • How many credit accounts do you have open

  • If there are any CCJs, defaults or Bankruptcy flags on your credit file

  • If you are making a joint application they will check the same details with your joint applicant

Lenders use all this factors along with their risk modelling to decide what rate they will offer you.

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How your credit file affects the loan you get
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