How does a lender determine my creditworthiness?

Before giving you a personal loan the lender will check your creditworthiness.  This is determining your ability to repay the loan.

Usually, this involves:

A credit reference agency
The lender will check the credit file a credit reference agency holds about you. This includes publicly available information, such as your address, whether you are listed on the electoral roll and whether you have any county court judgments against you (court orders to repay your debts). It also includes information about your current and past credit agreements, including details of any late payments and defaults on loans or credit cards. 

Credit reference agencies keep your credit history on file, but they don't make decisions on your suitability for a loan.

Credit scoring
When you apply for a loan the lender asks you questions about your employment position, the time you've lived at your current address, your annual income, whether you have a bank account and existing credit card. You get marks for each answer and these are added together to find your score. Provided your score is above an amount set by the lender, you qualify for the loan. The loan lender will not reveal how its scoring system works or what you scored.

If the loan lender thinks you are a high risk - in other words, there's a reasonable chance you might not keep up the loan repayments - your application may be declined.

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