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Check Your Own Credit Score

By: Jack Claridge - Updated: 19 Sep 2012 | comments*Discuss
Credit Score Credit Scoring Hire

There may come a time when you wish to make a purchase for which you simply do not have the funds available. Likewise you may wish to approach your bank or building society for a loan to help with home improvements, the purchasing of a car or the buying of a house. With these things in mind it is important to take into account your credit score.

What is a Credit Score?

A credit score is an independent rating that determines how much or how little of a risk you are when you wish to make a purchase using a Hire Purchase agreement or if you wish to enter into an agreement where ready cash is made available to you by a bank, building society or other financial institution.

This credit takes into account what debt is already allocated against your name and also whether or not you have the means and where-with-all to pay for such goods and financial services.

How Credit Scoring Works?

When we apply for credit our details are automatically passed on to one of the credit scoring agencies in the United Kingdom. There are several different credit scoring agencies but fundamentally they all use a similar process in order to judge how credit worthy we are.

With this in mind our details and the nature of the credit we require is passed on to them and they - using information collated from banks, building societies, county courts and other agencies - will determine the risk factor involved in lending us money or allowing us to take on a Hire Purchase agreements.

Credit scoring works on each of us having a score between 300 and 850. The higher the credit score the more credit worthy we are. You might think that this is the wrong way round but credit agencies use a higher score as an indication that we are trustworthy and are able to pay off our debts without falling into further debt or indeed without reneging on the debt full stop.

These credit scoring agencies will look to see if we have been in receipt of any County Court Judgments (CCJs) which are issued against individuals who have difficulty paying their debts or indeed do not pay them at all. These CCJs are issued only after every other avenue of debt collection has failed and ultimately a company, organisation or individual has taken a debtor to small claims court for non payment of a debt.

For the majority of potential borrowers in the United Kingdom their credit score is somewhere around 620 - this makes them an acceptable risk and if an agency scores you around this figure the likelihood is that you will receive your loan or Hire Purchase agreement. Anything below this and you may find that you have difficulty in borrowing.

What Can I Do to Improve My Credit Score?

As an individual you are entitled to see a detailed report of your credit history. With this in mind you can obtain a copy of your credit file from any of these agencies. Performing a search online will display a list of the most popular credit scoring agencies in the United Kingdom.

Once you have a copy of your credit report you will be able to see who has listed you as a high risk and who has listed you as low risk. If there are companies who have suggested you are a high risk because of outstanding debts with them then it is best to consult with these companies in order to try and find a way to repay debts to them and also improve your credit score.

Alternatively should you feel you are unable to do this by yourself you can contact the Citizens Advice Bureau or any independent financial advisor who will be able to give advice on how to reduce your debt and increase your credit score.

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