In the complex world of UK finance, your credit report serves as your financial CV.
Whether you’re applying for a mortgage, a credit card, or a personal loan, lenders scrutinise your credit report to assess your creditworthiness. This article aims to demystify the 10 key factors that lenders look at in your credit report, empowering you to improve your chances of securing credit..
What is a Credit Report?
A credit report is a detailed record of your credit history, compiled by credit reporting agencies. In the UK, the main agencies are Experian, Equifax, and TransUnion. These reports are updated monthly and provide a snapshot of your financial behaviour, which lenders use to evaluate your credit risk.
What You Owe
One of the first things lenders look at is your outstanding credit. This includes credit cards, loans, and any other forms of debt. Your credit utilisation ratio—how much of your available credit you’re using—also plays a significant role. Keeping this ratio low is advisable, as high utilisation can indicate financial stress.
Repayment History
Your past behaviour is often seen as a predictor of your future actions. Lenders pay close attention to your repayment history. Late or missed payments can severely impact your credit score and your ability to secure future credit. Always aim to pay your bills on time, and if you can’t, contact your lender to discuss your options.
Addresses Past and Present
Lenders also examine your address history to assess stability. Being on the electoral roll at your current address can positively impact your credit score. Frequent changes in your address can be a red flag for lenders, as it may indicate instability.
Financial Ties
If you have joint accounts or other financial associations, these will appear on your credit report. Being financially linked to someone with poor credit can negatively affect your own creditworthiness. If this is the case, consider disassociating yourself from the individual in question.
Application History
Every time you apply for credit, a ‘hard search’ is performed on your credit report. Multiple applications in a short period can be a red flag for lenders, as it may indicate desperation for credit. Always be mindful of this when applying for new credit lines.
Issues with your credit file, or bad credit?
Get the help and advice you need, plus access to over 100 different lenders
Award winning service
Independent mortgage advice
FCA Regulated
Fraud and CIFAS
If you’ve been a victim of fraud, this will be flagged on your credit report through CIFAS, a not-for-profit fraud prevention service in the UK. This is to protect you from further fraudulent activity but can also make obtaining credit more challenging. If you suspect you’ve been a victim of fraud, contact CIFAS and the credit reporting agencies immediately.
Court and Public Records
Any public records like County Court Judgments (CCJs), Individual Voluntary Arrangements (IVAs), or bankruptcies will also appear on your credit report. These can have a long-lasting negative impact on your ability to secure credit and should be avoided whenever possible.
New Accounts and Types of Credit Used
Opening multiple new accounts in a short period can be seen as risky behaviour by lenders. Additionally, having a diverse range of credit types—like a mortgage, car loan, and credit cards—can positively impact your credit score, as it shows you can manage different types of credit responsibly.
Additional Factors
Other factors like utility payments and phone contracts can also influence your credit score, although to a lesser extent.
Some lenders also look at GAIN information, which stands for “Gone Away Information Network.” This is a shared database used by lenders and credit agencies to flag individuals who have moved without informing their creditors. If you’re listed on GAIN, it could indicate to potential lenders that you’re a higher risk, as it may suggest you have avoided paying debts in the past. Therefore, it’s crucial to always update your address with all financial institutions to avoid being flagged on the GAIN database.
30 day FREE credit report trial
Get The UK’S Most Detailed Online Credit Report
See your data from 4 Credit Reference Agencies, not just 1
Get an independent view with your checkmyfile Credit Score
View up to 6 years’ credit history
Easy to cancel – by Freephone or even online
A guarantee never to sell your personal data
Consistently rated ‘Excellent’ on Trustpilot
This is a 30-day free trial, and a recurring £14.99 thereafter unless the subscription is cancelled, which can be cancelled at any-time.
