Credit Cards & Scoring

Before a Credit Card company accepts or rejects your application for a credit card they will invariably undertake a credit review to establish if you are a good or bad credit risk.  They will do this in two principle ways:  they will conduct a credit check and credit scoring review.

What is a credit check?

A credit check will be made on factual information held about you on a credit register.  The are three main credit reference agencies collecting and holding information on us. These are Equifax, Experian and Callcredit.  The information these agencies hold will allow the lender to check details including your name and address, your credit history with other lenders, as well as any County Court Judgements (CCJ’s) or defaults recorded against your name.  Together this information will form your ‘credit refererence’.  This credit reference therefore will determine your ability to secure a credit card and borrow money at attractive rates of interest.

credit reviewWhat is Credit Scoring?

Credit scoring is a method of rating your credit application by applying a value or ‘score’ to the answers that you provide when completing your credit application.  A lender will hold their scoring system confidential, but it is likely they will award scores based on things like: how long you have been resident at your current address, how long you have held your bank account, your occupation and how long you have been employed in your current job, and your annual household income.

You should, at any rate, regularly check your credit reference files yourself so you can see what the lenders or credit card companies are seeing. Another advantage is that It will also help you know if anyone is fraudulently using your name to open new credit agreements.  The main credit reference agencies are Experian and Equifax and you should check them both if only to confirm that the information they hold on you is correct.  The third agency, Callcredit, is a fairly new company. Continue reading