Whenever you apply for credit one thing is for sure, the credit companies will want to know who they are lending their money to.
They will use 3 different ways of assessing you which are, credit scoring, credit rating and credit history. Many people think that these are all the same thing but they are in fact subtly different.
What is a credit score?
Your credit score will be created by the credit providers from the information you have given in your application, what's in your credit report, and your credit rating. The provider will use this credit score to decide whether you qualify for credit, what your credit limit could be and the interest rate.
Learn how to improve your credit score.
What is a credit history?
Your credit history is held by credit reference agencies and is one part of your credit report. Basically, credit history is exactly that, how you have managed your finances in the past, including credit cards, loans or a mobile phone contract.
What is a credit rating?
Your credit rating is a score based on your credit report created by the credit reference agencies. It takes all of your credit history and applies an overall score to it based on how you have managed your finances in the past, giving you a good general indication of how lenders are likely to view your application. It also looks at non-financial information such as court orders i.e. CCJ's, and whether you are on the Electoral Roll.
Find out how you can improve your credit rating
What is a credit reference agency?
Credit reference agencies are companies that collect information about you, for example information from the electoral roll, what credit card and store cards you have, your mobile phone contract suppliers, mortgage information - essentially anything financial. They also monitor how well you have paid these providers.
The credit reference agencies then sell this information to credit providers as credit reports.
Credit Reports
Credit reports help credit providers to rate your suitability for products and decide whether to accept your application.
You can see a copy of your credit report by contacting one of the 3 independent credit reference agencies: