Tag Archives: credit score

Understanding why you were refused credit

The monthly financesIt can be a real pain when you make an unsuccessful credit application, especially when you can’t see why you were refused.

“But I’ve got a good credit score!”, “But I pay all my bills on time!”, “But I don’t even have a credit card!”, people may say.

When you apply for a credit card, a loan or even a mobile phone contract, it’s up to the lender to decide whether or not to lend to you – and they have varying methods to work out if you’re a risk worth taking.

New research from Experian* has found that 86% of Brits think that lenders should share information on the reasons why they have been refused credit.  If you’ve been turned down, only the lender can tell you why because only they know. If you ask, they should be able to give you the main reason.

Does being refused credit affect your credit score?

Experian’s research also found that 75% of the population think that being refused credit affects your credit score.

Being refused for credit is not, in itself, hazardous for your credit score. While your credit report will show that you applied for a credit card – it stays on for a year –  it won’t actually show whether or not you were accepted.

However, credit refusal can often lead to more attempts to get credit – and making a lot of applications in a short space of time could have a serious impact on your credit score, and your ability to get credit in the future.

That’s one reason why Experian have partnered with Credit Strategy for 2017 Credit Awareness Week, in which the aim is to empower people to improve their financial future.

Some common reasons to be refused credit:

  • You’ve missed or made late credit payments recently, which show up on your credit report
  • You’ve had a default or a CCJ in the past six years, which will show up on your credit report
  • You’ve made too many credit applications in a short space of time in the past six months
  • There are mistakes such as incorrect addresses or other errors on your application form
  • You may not fall into the target bracket for the type of credit you’ve applied for

Understanding the impact of your credit report

Did you know that 61% of homeowners have never checked their credit report? Your credit report is a summary of credit accounts you’ve had in the past six years – and that can include not only credit cards, loans and mortgages but also overdrafts, mobile phone contracts and certain utilities such as gas, electricity and water.

Lenders use it to take note of your repayment records and how well you’re coping with your finances, and use it, along with the info on your application form and info they might already have if you’re an existing customer, to help them make their lending decision.

In our survey, only 56% identified the lender as the one who makes the final decision for a credit card, with loan (61%) and mortgage (67%) not far ahead.

Interestingly, 76% said they would like to see more information on what they can do in the future to ensure they don’t get refused credit again.  Understanding how your credit report works could help you understand the reasons why you may have been refused credit – and help you manage your finances better in the future.

Understanding your credit score

We also found that the young don’t check their credit score. 85% of Brits aged 18-24 don’t know what their current credit score is, and almost three-quarters (73%) have never checked their credit score.

Your Experian Credit Score tells you how lenders may view you, which is useful when you apply for credit – and is FREE FOREVER. The higher your credit score, the more chance of being accepted for credit, at the best rates.

* Conducted by YouGov on behalf of CFA, 10th – 13th March 2017

Car finance: how to get the deals you want

Making memoriesDid you know that new car registrations are on the up? They were higher than ever in 2016, with over 2.6 million cars registered throughout the year.

And from 1 March, all new cars for the next six months now have the new 17 number plate. However, the forecast is not all rosy. The chief executive of the SMMT (Society of Motor Manufacturers & Traders), Mike Hawes, said on 5 January that he thought this may have been a peak, and that 2017 would see a 5% decline due to the weak pound and the effects of Brexit.

Car finance is one of the most common examples of how we pay for ‘large ticket’ items, and a good credit rating can be the difference between getting a good interest rate or not, or sometimes getting any deal at all.

What are your car finance options?

If you decide to borrow credit to buy a car, the marketplace is vast, with plenty of rate and payment options. It’s worth comparing different loans and methods of finance so you get the one that’s best suited to your needs.

How often do you use your credit card?

Credit cardsIn January we asked our Twitter audience how often they use your credit card, and over 3500 of you replied.*

Over half of those who responded (53%) said they use their credit card at least once a week – with over one in four (27%) saying they use it every day.  Just over one in five (21%) said they use it monthly, while just over one in four said ‘other’.

We also asked How much of your credit card balance do you pay off every month?**
41% said they pay off the full balance of the card , while 18% told us they make sure they pay the minimum payment. A further 29% said they pay only what they can afford.

Finally, we asked What’s your priority when deciding to switch or compare cards***.
43% told us that reducing the interest they pay was the biggest priority, while 32% said that it depended on which rewards and benefits were available.

A wide range of responses such as this could mean that different credit cards may suit different people.  Think about what you actually want a credit card for. Is it for doing the weekly shop? Making a large purchase?  Or paying off a current debt at a better rate? Continue reading

Credit card jargon buster – 10 top terms

Credit cardsEver wondered what some of the key credit card terms really mean? Here are our top ten.

  1. APR – The annual percentage rate is the price you pay each year for money you’ve borrowed, including interest and fees.  The representative APR is an advertised rate that a minimum percentage of customers will pay, usually 51% of those accepted.  If you’re not given the advertised rate, you’ll get a personal APR.
  2. Balance Transfer – This is when you choose to move credit card debt you already have to a lower or  0% interest credit card balance, usually for a transfer fee.  With a 0% balance transfer deal you can potentially give yourself longer to pay off an existing credit card debt, without having to pay interest. This is as long as you make the minimum monthly payment and stick to any other Ts and Cs. More about balance transfer cards here
  3. Continue reading

How well do you know yourself?

How well do you know yourself? We decided to try and find out, one day last month in Nottingham.

And it turns out that while there’s a lot we do know about ourselves, one thing not many of us know is our credit score.

We set up a booth where people could pop in and answer some simple questions in our quiz – but one question above all foxed them.  Watch the video to find out how and why!

Continue reading

Black Friday? What’s that all about?

Black Friday and Cyber MondayChristmas shopping season is about to really get into gear.  Black Friday (November 25th) and Cyber Monday (28th) book-end a long weekend of huge online discounts aimed at tempting Christmas shoppers. 

These two imports from the USA – the Friday after Thanksgiving and the Monday that follows – combine heavily discounted ‘physical’ shopping ins-store with widespread online deals.

And now Amazon.co.uk are beginning their Black Friday over a week earlier than the ‘official’ day, by featuring special offers online on large-ticket and luxury products every day now until 25 November.

Continue reading

A new US President: what about our finances?

If you’re planning to get a new card for your holiday spending, check your Experian credit report before applyingNow that the US presidential election has reached its conclusion, what does a victory for Donald Trump mean for UK and global finances?

A Clinton win had been on the cards for some time, but Trump’s victory surprised many all over the world.

Before election day
After she was cleared earlier in the week by the FBI of criminal wrongdoing with regard to emails, the dollar immediately rose in value, with US markets easing back on risk-aversion measures. Continue reading

What’s the average Experian Credit Score where you live?

Average Experian Credit Score in Edinburgh What’s your Experian Credit Score?  We wanted to see if there were any significant differences in the average Experian Credit Score in different UK cities – from a variety of locations.

The Experian Credit Score runs from 0-999, and usually a higher score means you’re seen as lower risk, which means you could be more likely to get a credit card, a loan or a mortgage, and at better rates too.

You may have seen some of our posters beside major roads, or if you’re in London, on tube platforms. If you have, I hope you saw your local area listed!

We looked at the average Experian Credit Score in ten of the largest local authority areas outside of London, based on Experian customers who joined between January and September 2016. Continue reading

Spreading the cost of Christmas shopping

friends-shopping-xmas-300Most of us spend more in the immediate approach to and during the festive period than we normally would, so it’s probably a good idea to budget in advance and put some money aside – so that come mid-December, you don’t have to dig too much into money you either don’t have, or money you’re going to need in January.

Here are five things that might be worth thinking about:

  1. Christmas is a prime time for buying things that are either unwanted, don’t work properly or don’t fit. But… buying on credit can give you protection. If you buy goods or services on your credit card, you have extra protection if things go wrong, compared with paying by cash or even debit card, under section 75 of the Consumer Credit Act. Continue reading

Ask James: latest credit questions answered

James Jones

James Jones

Every month Experian’s James Jones answers a selection of your questions about credit and fraud in his ‘ask the experts’ style column here.

Sultana from Ilford wants to register her 17-year-old for a credit report but is unable to – James explains why this is so, and what they can do next.

Bianca from Tunbridge Wells wants to know if her library fine will affect her credit score, while Alan from York has a row of U’s on his credit report and asks Will the status code U on my credit report damage my score?

Anne-Marie from Newcastle-under-Lyme has this question: Can changing bank accounts have an effect on my credit score?, as she wants to apply for car finance later in the year.

See the previous Ask James: questions about claiming benefits and credit rating, changing from PAYG to direct debit, and more.

You can find more Ask James questions answered in our Ask James archive.  If you have a specific question and can’t find an answer here or you wish to contact us to query something on your credit report, please contact us – find all the ways you can contact us here.