Credit Checking and scoring

18 Jun, 2014


Lenders want to make sure that you are a good risk and do not have a history of bad debts and unpaid loans behind you. To do this they will do two things. First they will check your entry on credit registers. Credit reference agencies such as Experian, Equifax and CallCredit PLC hold factual information about you and this allows a lender to check your name & address and your past credit history, including any County Court Judgments or defaults recorded against you. This will provide your ‘credit refererence’.

The second thing that the lender will do will be to credit score your application. They do this by allocating points to a variety of questions they have asked you. They then add up the total points score and you either pass or fail depending on the result. For example, they are likely to award you more points the longer you have been resident at your current address or with working for your current employer. They will also take into account things such as your occupation, your age, whether you have a home telephone and how long you have been with your bank etc. Lenders will never divulge how their credit scoring works for fear of fraud and each lender will have their own system. The fact that you have been turned down by one lender will not necessarily mean that you will be declined by others.

A poor credit record won’t necessarily prevent you from getting a credit card, but you will probably have to pay a higher interest rate. The self employed, or those – increasingly common these days – on short-term contracts may not be such an attractive risk to lenders.

People are refused credit for a number of different reasons and there is no automatic ‘right’ to credit, although it is illegal to refuse credit for reasons such as race, gender, religion, sexual orientation or address.

A common reason however for being turned down for credit may be because information held about you by a credit reference agency, or information provided in your application form, suggests that you will have problems repaying. Another very common reason for being turned down is that you may not appear on the Electoral Roll with the credit agencies at your quoted address. If you are having difficulties in obtaining credit then it is always worth checking that you actually appear on the voters roll at your current address.

If you don’t, you’ll be lucky to get credit anywhere. You can check this by reference to Experian ( or Equifax (
If a lender turns you down for credit they must explain to you the reason.
However, they do not have to go into detail and simply have to tell you whether it is due to their credit scoring or information from the credit reference agencies.

How do I check my credit file?
Most lenders go through three main credit reference agencies for information on your financial past – Equifax (, Experian ( and CallCredit PLC ( These three agencies, although business rivals, work pretty much along the same principles.

Each compiles credit histories from a number of different sources, including the electoral roll, county court judgments and how effectively past debts have been managed. Every time you open a new form of credit it will leave an electronic foot print on your record, which the agencies use to compile a credit ‘scoring’ system. When you apply for a personal loan, the lender – be it a bank, building society or internet based provider- will firstly run a credit check on you to see what kind of ‘score’ you have.

If you are turned down for credit, this is not a decision made by Experian, Equifax or CallCredit PLC, but by the lenders, based on their own criteria.

If you want to get hold of an up to date copy of your own credit report, please refer to section 7 of this guide for full contact details of Experian, Equifax and Callcredit.

If a lender refuses you credit, it must say why. Under the Data Protection Act, if you are refused credit, and scoring was used to help the lender decide, you can ask for a review of your application.