8 Out Of 10 Britons Have No Idea What A Credit Rating Is

Given the importance that credit ratings play in determining whether or not your application for a loan, home loan or credit card in UK will be successful, it is somewhat suprising to hear that according to a new report out by Npower, 8 out of every Brits doesn’t even know what a credit rating is. Hardly suprising then that many Brits may well be facing severe financial hardship with imposed higher rates of interest as a result of having a bad credit history they have never even heard of!

In sort, every time you apply for a loan, home mortgage or credit card, indeed any kind of credit, in the UK the lender will ask a credit rating agency to provide them with a report on your previous credit history. Details included in this report, however, will not only be limited to whether or not you pay your credit card or loan repayments on time, but they will also include whether or not you have been paying your UK utility bills on time.

Although a somewhat complicated form of credit scoring will then be undertaken by the potential lender or issuer of your loan or credit card, if you have a bad credit history is it likely that either:

(a) your application for a loan or credit card will be declined; or
(b) the lender or issuer of the loan or credit card will agree to provide you with your requested service, but they’ll expect you to pay additional interest and fees above and beyond those normally applied.

Because of the importance that credit rating play in any application we make to loan lenders and UK credit card issuers, it is essential that we not only ask for a credit report before we apply for any form of credit in the UK, but also that we keep periodic tabs on our credit rating and history to ensure that no information is being included that should not be and which might have an adverse affect on our credit rating.

In short, far more of us in the UK need to educate ourselves of the importance that credit ratings play in the modern world of finance and make efforts to ensure that our credit histories reflect our actual credit history. After all, there can be nothing worse than being declined a UK loan or credit card application and both not knowing the reason why and also not doing anything to make sure that this doesn’t happen again in the future.

Richard Smith
10th August 2006

More Information:

• Applying For Credit Cards When You Have Bad Credit
  For those with a poor credit score, getting a credit card is harder. However, there are solutions and we will discuss and offer these in the article.
• Using Your Credit Card To Build Credit History
  Let’s say you want to buy a house, but you need to get a mortgage to help pay for the house. However, you have no credit history to speak of, so how can you apply for the mortgage to get your dream home?
• Credit Building Tactics
  Much is written about credit ratings, the score against an individual’s name, that rates their eligibility for credit. This article discusses different methods that you can use to try and build a new, better credit rating.
• Experian UK - Equifax UK - The main credit reference agencies of the UK
• Improve your credit rating - an advice article from the online publication, This is Money.

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