Your credit rating – what you need to know

As a responsible lender with the overall financial wellbeing of our clients at heart, we at Machar Loans feel it our duty to not only offer affordable loan products but to also help educate our clients, especially those who suffer from a bad credit rating.

Believe us when we say, that a bad credit rating is going to affect you for the rest of your life and the sooner you do something about it, the longer it will affect your life. Do you want to buy a house one day? No chance of getting a mortgage from the bank with a bad credit rating. What about a nice new car? Car finance is just not going to happen with a bad credit rating. Need a loan to pay for your children’s education? Forget it, that bad credit rating will rule you out from a conventional loan. Even something as simple as a mobile phone contract is not possible if you suffer from a bad credit rating.

And although there are loan products such as our logbook loan offerings for people suffering from bad credit, you really do need to dig yourself out of a hole, especially with the uncertainty on the world markets.

That said, unfortunately, many people are not even sure what their credit rating is, or what it even means. The media spread far too much information regarding the subject which is unfortunate, because you, like most of the public will need a loan product at some point in their lifetime. It is inevitable.

So let’s take a look at some information about credit ratings that will help you to remain informed.

A universal credit rating – there simply is no such thing

The first thing we need to do is avail your fears. You may have heard of a credit rating blacklist. This is used by the powers that be (banks etc.) to scare people. The reality is that there is no blacklist. So because one doesn’t exist you cannot ever be put on it. That said, when it comes to scoring you to see if you are eligible for a high-street bank loan for example, different institutions use a range of methods to score an applicant. If you credit rating is borderline, one financial institution may reject for a loan while another might approve you. Don’t apply for too many however, as each application does leave a footprint on your credit record. Too many of these are generally frowned upon. When you are rejected, be sure to ask for the reason. You have every right to know why.

Credit scoring is used by lenders to attempt to work out your behaviour

Lenders use your credit history to see how you will perform should they give you the credit product you applied for. Of course, if your credit history is poor and filled with missed payments and ccj’s, you stand little chance of getting the product you applied for.

Surprisingly, people with good credit histories can also be rejected

Believe it or not, people with good credit histories can also be rejected. This is mainly because they repay their loans in full without missing a repayment and they only take out a loan product very infrequently. Banks want you to remain in debt, it is how they make their money, from the interest on your debt. People with excellent credit records won’t be rejected indefinitely like someone who has a bad credit record. Some financial institution will give them a credit product fairly soon.

You’d be surprised how much lenders know about you

No matter what your situation, be as honest as you can when applying for a loan product. No matter who you apply to, a high-street bank or your local lender, they know everything about you already, which they find on your credit report. They can approach any number of credit reference agencies to get this information, including Call Credit and Equifax.

So make sure you fill in the application forms truthfully, especially when it comes to any figures regarding your income and expenditure. You may be asked about previous applications that have been turned down before. Again, be honest and tell the lender you are applying to the reason why the application was turned down, if they should ask.