How Does Credit Scoring Work?
Want to find out more about credit scoring? Find the answers below.
Our loans:
Borrow up to £250,000
Flexible terms from 3-25 years
We consider all credit histories
Employed, self employed, pension and benefit income
We're a direct lender, so there are no hidden broker fees
Representative Example: A secured loan of £37,000 payable over 9 years on a fixed rate of 10.61% for the first 5 years, followed by a variable rate, currently 12.19%, would require 60 monthly payments of £569.20 followed by 48 monthly payments of £586.29. The total amount repayable would be £62,293.92, this includes interest, an arrangement fee of £1,998 and a processing fee of £499. The overall cost for comparison is 13.4% APRC representative.
How it works
Organising your finances can sometimes feel stressful, but we want to make it as easy as possible for you.
In just 3 simple steps you could have the money in your bank account. All you need to do is:
1: Enquire
Complete our quick and easy online enquiry form. Alternatively, you can speak to an advisor instantly by calling us or starting a live chat.
2: Your details
One of our qualified advisors will call you to discuss your enquiry and work out a monthly payment that meets your needs and circumstances.
3: We'll do the rest
We'll help you complete the paperwork and any other supporting documentation required.
What do our customers say?
You can relax knowing you’re working with a highly rated team. But don’t just take our word for it, visit our website and read our reviews – they speak for themselves.
What is a credit score?
Credit scores are created by credit reference agencies to help lenders or businesses understand your credit history and determine your credit risk.
A credit file is simply data that has been collected about a borrower that reflects their history with credit. Everyone has their own personal credit score, which usually ranges from 300 to 850. However, each credit reference agency has its own specific method of calculating a credit score.
Lenders and businesses will often use a credit score to understand a client’s past credit behavior, allowing them to assess how suitable it is to lend money to a borrower. For example, a mortgage lender may look at whether or not a borrower has any existing debts.
If your credit score is low, it doesn’t mean that you won’t be accepted by a lender. All lenders have their own criteria and most will look at the data and make their own mind up based on what they see, rather than letting a computer automatically decide.
How does credit scoring work?
Lenders and businesses will obtain credit information from credit reference agencies to provide them with an understanding on a borrowers financial circumstances. From this they may be able to determine whether or not you are a ‘good’ borrower, based on your credit records.
As mentioned above, each credit reference agency uses different methods for working out credit scores, which means there isn’t a single magic score you can choose. Regardless of the score, the rule remains the same. The higher scores indicate that a borrower is a lower risk, meaning that a low credit score presents the borrower as being a high risk for the lender.
We specialise in providing loans for people with adverse, poor and even bad credit. You can discover how much you could borrow today – it’s quick and easy and won’t affect your credit score!
Why choose Central Trust?
35 years' experience
We are one of the UK's longest established specialist lenders trading since 1988 giving us over 35 years' experience providing secured loans, homeowner loans and second mortgages.
Simple application process
You can call our team directly on 0800 980 6273 (Mon-Fri:8:00am-7:00pm /Sat:9:00 am-1:00pm) or you can enquire online at any time using our quick and easy online form.
All credit considered
We understand that life happens and there's more to your story than your credit score or recent pay slip. So if you have a less than perfect credit score we could still help.
What are credit reference agencies?
Credit Reference Agencies are independent organisations that securely holds people’s credit information and other relevant data. This includes a borrower’s presence on the electoral register and your past and current credit agreements. They hold this information to help companies such as mortgage lenders understand a borrower’s financial circumstances.
These agencies exist to promote responsible lending and support debt recovery, whilst preventing financial crime such as bad debt, fraud and money laundering.
What makes up my credit score?
There are different factors that contributes to your credit score, including your personal information, credit history, public records and credit checks.
Personal information:
Personal information such as your name, home address, salary, your relationship status, if you have a family or whether you rent your home or you are a homeowner is kept about you. All of this information helps lenders understand who they could be lending to and whether or not you’ll be able to pay them back within a certain timeframe..
Credit history:
In order for a credit score to be created, referencing agencies will look at your credit history. They will often look at your past payment history, credit usage and the types credit accounts a borrower has. So, if you’ve always paid your bills or debts on time your credit history will reflect that and you’ll likely have a good credit score. On the other hand, if you have outstanding debts, multiple loans or a poor repayment history, then it’s likely your credit score will be poorer.
Public records:
Referencing agencies will have access to public records to identify events such as County Court Judgements (CCJ’s), bankruptcies and insolvencies. These will show up on your credit score, however these won’t be on there for the rest of your life. Public records stay on your credit report for up to 6 years.
Credit checks:
Some enquiries that you make when you apply for credit will also show on your credit report. There are two types of credit check, a soft credit check and hard credit check. Soft credit checks aren’t visible on your credit report, so they have no impact on your credit score. Only you can see them and it doesn’t matter how many there are.
Hard credit checks happen when a company makes a complete search on your credit report. Every hard credit check is recorded on your report, so a company searching for it will be able to see if you’ve applied for credit or even a loan. If you have lots of enquiries over a short timeframe it may appear to a lender, employer or insurer that you’re struggling financially. Whilst public records stay on your credit report for 6 years, enquiries only stay on your report for up to 2 years.
Case studies
Home improvement loan
For an applicant with poor credit history.
Secured loan
For a self-employed client with limited trading history.
Debt consolidation loan
For an applicant with multiple lines of credit.
How can I improve my credit score?
Everyone makes mistakes and sorting out your finances can sometimes feel like a challenge. But a credit score isn’t like a criminal record, it won’t ‘follow you around for the rest of your life’.
There are ways you can improve your credit score. For example:
Always make your regular payments on time
Some credit reference agencies offer instant score boosts, allowing them to look for examples of responsible financial behavior using your current account. They’ll look into your direct debit payments such as your Council Tax or any monthly subscriptions to ensure you are paying them on time each month.
Organise your finances and ensure you have enough money for your outgoings. This is a good way to show lenders you’re a reliable borrower and capable of managing your credit.
Check for errors in your credit file
Even small mistakes in your personal details, such as a mistyped address can affect your credit score, and can be a reason for a lender to refuse you credit. You can check your credit score and details using free services like Experian.
Use a “Credit Builder” credit card
You could boost your credit score with a credit builder card. These cards are designed for people who have poor credit scores that want to improve their financial circumstances. They work like any other credit card does. You can use them to borrow money to pay for goods and services, however there is an agreed limit. Provided you use them carefully by spending below your limit and applying off your balance in full, credit builder cards should help you improve your credit score.
Ready to enquire?
Talk to our qualified mortgage experts now
We are here to help
- Friendly UK based advisors
- Enquiring won't affect your credit rating
- Fast turnaround times 7-10 days is possible
- No phone menus - immediate contact from our advisors
- We are a direct lender, so we'll work with you from start to finish
Tara Evans
Head of Direct Sales
20 years at Central Trust
01923 280199