What is a credit report
When you apply for credit, lenders want to make sure you can comfortably afford to manage any new borrowing. To do so, they usually calculate a credit score, weighing up all the relevant information at their disposal - this helps them to assess the chances that you will be able to repay what you owe.
People with a high score are usually seen as lower risk, and could therefore be more likely to be granted credit - and possibly at better rates.
Lenders calculate a credit score using information from several sources - these can include:
Credit scores do not take account of gender, religion, race or ethnic origin.
Because lenders have different acceptance criteria for products, they take different factors into consideration and can even score the same factors differently. The same lender may even, for example, score a mortgage application differently to a credit card.
Credit scores change over time as your circumstances change. For example, paying off a loan could result in a higher credit score, while missing several repayments could reduce it. It's always a good idea to check your credit report before applying for credit. You may spot areas you can improve upon.
Just as lenders use their own formula when calculating a credit score, they also set different thresholds for accepting an application. These thresholds can vary according to the type of credit you want, so you could be accepted for an overdraft or mobile phone account but have a request for a car loan refused.
Lenders specialising in, for instance, lower-income customers may grant someone credit when another bank refuses.
A good way to stay in control of your finances is to check your Experian Credit Report with Experian CreditExpert*.
Experian CreditExpert provides more than just your credit report, including: