Check your credit history before applying for credit

If you are on the verge of applying for any form of credit, from applying for a mortgage to taking out a new mobile phone contract, but have no idea how creditworthy you are deemed to be by potential lenders, it could be worth your while to check your credit history before you apply.



Your credit history will form part of the decision process on which the company will either approve or reject your application. The two other important factors will be the information on your application form and any past dealings you may have had with the company.



From your application the potential lender will determine whether you own your own home, your salary, the size of your family and the reason you are applying for credit. All of these factors will impact on the final decision to grant or reject your application. Similarly, how you conducted any accounts that you may have had with the company in the past will also influence the final decision.



The last part in the decision process will include an evaluation of your credit reference agency file. There are three major UK agencies - Experian, Equifax and Callcredit - that all use five main sources in compiling your credit file, namely:



* electoral roll - information to verify address details and who is also living at the address



* account data - organisations that have dealt with you in the past such as banks, building societies, credit card and store card companies will record how you conducted your account in the past with credit referencing agencies. The debt balances you hold and information on your repayment habits, including the amount repaid will also be shared. It is essentially a summary of your credit history



* court / public records - show details of any CCJs, bankruptcies, IVAs recorded against an individual



* fraud data - information relating to stolen identify and fraud is supplied by CIFAS - the UK's fraud prevention service



* searches / address and linked data - when other lenders search your file an imprint is left that other lenders checking your file can see. Any addresses to which you might be linked and people with whom you have a financial association are also checked.



However, do remember that even if you determine that you have a good credit score it doesn't necessarily mean that you will be accepted for every loan, credit card or mobile phone contract for which you apply. Companies have target markets and if you don't fit into their criteria you could still be rejected.



In such cases you need to determine whether that company is simply being picky, or whether there is something on your credit record that is scaring potential lenders. Providing your credit history is in order and you have a good credit score it could be merely the selection criteria of the company that is preventing the completion of the application.



Matthew Pressman writes for a digital marketing agency. This article has been commissioned by a client of said agency. This article is not designed to promote, but should be considered professional content.