Understanding your credit score is a vital component of managing your finances as an adult. If you are in the process of applying for a payday loan, or some other form of credit, your credit score might have an impact on it (both positively and negatively). In some cases traditional lending sources are unwilling to give loans to applicants with an adverse credit history, whilst some payday loan lenders are happy to lend money to applicants with a bad credit score as long as they can demonstrate that they are willing to work hard to move away from bad credit, and that they have the income to make any agreed repayments on time and on a regular basis.
How does your credit rating work though?
There are a few things that determine your credit rating. These include the information that you disclose as part of a credit application of any kind, the information sitting within your credit file, and your previous credit history with the lender you are applying through.
You will have a credit score if you are over the age of 18 and have ever had to pay a utility bill, a loan, and a mortgage, taken out a store card or a credit card, or even an account with a catalogue. There are three credit reference agencies that hold this information (each have slightly different scoring systems), and you can view your credit file for free with each upon request. If your credit score meets the minimum level of expectation for the criteria of the lender you are applying with you’ll be accepted for a line of credit, and this will be marked within your credit history. If your credit rating is below this level you will either be declined the application or offered a higher rate of interest to borrow the same amount. In both cases the application is marked on your credit file as an attempt to apply for credit.
Finding out what is in your credit file is important as it allows you to rectify any inaccuracies that may be present – which can harm a credit application – as well as giving you an indication as to how you are performing overall with your credit.
Lenders are allows to check the credit history but only with your consent, whereas only you have the right to view your entire credit report. It will contain information about your name and address, your financial history, and all credit repayments you have made over the years. A credit file takes your financial history and credit applications from various sources in order to build an accurate picture of how reliable a borrower you are, and whether a lender can trust that you will repay a loan or line of credit.
Always be on top of your credit file and understand that to check it regularly will help you to manage your finances better moving forward and to understand when and how best to apply for new lines of credit. Remember, even with bad credit, loans are available through payday loan lenders with a responsible and transparent service.