Everyone knows credit scores are important because they help you get credit. As an FCA regulated lender, we make lending decisions using credit scores.
However, we don't just use credit scores. We continue to accept members with credit scores below 50 and can sometimes reject those with almost perfect credit scores.
The point of this article is to help you understand what is really important when it comes to getting credit. Your credit score is just one variable, and in our case, as a lender (and probably for other lenders too) it may not be the most important.
We won't automatically say no to someone with a low credit score, but we will if we see some of the following: Bankruptcies, CCJs, IVAs, DMPs We also look closely at affordability, so any of the following signs will hurt your access to credit: High use of payday loans, being far behind on any other forms of credit, having negative disposable income after your monthly debt repayments We also need to make sure you are who you say you are. If we can't find any proof of ID or residency, usually from having other credit accounts at your current address or being registered to the electoral register, we will have to say no.
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Once we make a first decision to watch out for any of the big warning signs listed above, we look at many different items on your credit report and your application form. You always have the ability to improve and change the above items in your daily life. We want to say yes, and if you score highly on the below, you will increase your chances.
In general, the higher your credit limit, the higher the chance you will get accepted. This is because it shows that other lenders trust you, and implies you have a good credit history. If you don't have any credit limit at all, it will negatively impact your access to credit.
Length of credit accounts
The longer you have had credit agreements reported on your file, the higher the chance we will accept you as a member. This gives us an idea that you have been using credit responsibly for a long time.
Any new credit agreements?
If the last credit agreement you took out was some time ago, the higher the chances are that we will accept you. You will get negatively impacted if you take out credit agreements in a close time period to each other as it shows signs of distress.
Number of recent new credit agreements
Like the above, if we see you have not taken out many new credit agreements recently, it will improve your chances of getting credit.
Credit utilisation is how much of your credit limit that you have used. The less you have used your credit limit, the higher the chances of us accepting you. If you are close to maxing out your credit card, it will negatively impact your access to credit.
Your recent payment history
If you have mostly been on time with your credit agreement payments over the past few years, you have a higher chance of getting accepted.
We started this article by telling you your credit score is not as important as most think, and we still believe that. Why? They are very crude and only tell something, but not everything. For example, your score can be anywhere from 0 to 200 and we will treat it the same, no matter what it is. As we stated earlier in this article, it's possible to get accepted or rejected with any score.
Should I care about my Credit Score?
You should care about your credit score, and we believe it is important that you try to improve it. A good credit score definitely improves your ability to get credit. However, as you can see above, there are other factors that are just as important, and in some cases, those are also easier to change than your credit score. We believe it's more important to care about your financial stability and your financial resilience, keeping an eye on your credit score, credit report, as well as your monthly spending, saving, and budgeting habits. While we believe credit scores are not as important as you may think, we are still very proud to say that our members have seen a 34% increase in their credit score since joining.