Credit Score

This is a question many us have asked ourselves. If you’ve ever applied for a mortgage taken out a bank loan filled out an application for a mobile phone or broadband contract you've probably seen the disclaimer subject to credit score.

Before taking you on as a customer or offering a new product most responsible businesses will want to know that you can comfortably manage the repayments on any mortgage, loan or other service they provide for you, to enable them to do this they calculate a credit score which helps them to decide the likelihood that you will be able to repay what you owe.
To do this, they take information from two key sources firstly your credit report and secondly your credit application form.
Past history with the company may also be taken into account.

From this information they will look at factors such as how much you earn, the length of time you’ve been employed, you’re housing status and how many children you have.
From your credit report they will look at the number of credit accounts you may have, your repayment history on these accounts, any recent applications for credit, whether you’ve taken out an Individual Voluntary Arrangement (IVA) or been bankrupt and even if you’re are registered to vote.

To each of the items the company in question have considered, they will allocate a value this is formulated from past industry experience and the experience of other borrowers.
The total is collated and this makes up your credit score, which is also sometimes known as a credit rating.

Credit scores are a single number, usually between 0 and 1,000.

A higher credit score usually indicates a low risk that repayments will not be made.

A low credit score can indicate a higher risk that repayments may not be remade.

so, in general, a high credit score means it's more likely that you’ll be able to get the deals you want.
A low credit score, however may make it difficult for you to get credit or mean that you will pay higher interest rates on borrowing you take out.