Being declined for a loan, overdraft, credit card or mobile phone can
be frustrating, particularly when all the lender will tell you is
that you have failed their credit score and nothing else.
Whilst each lender will ultimately score applications based on the
services they offer and their own criteria, there are a number of
factors which will impact your credit score and could lead to your
application being accepted or declined. Knowing what those criteria
are can help you improve your ability to get the credit you want.
These are the Six Top Credit Score Killers . . .
-
Not on the Electoral Roll
If you are not on the electoral roll at the address on the
application there is a high probability of rejection.
-
Bad Credit History
Past credit history usually counts for 35% of your credit score. It
is not just having County Court Judgements (CCJs) or defaults on your
credit report that has a negative impact. Missed and late payments
will also dent your score. But whilst negative entries will stay on
your credit file for 6 years, the impact of missed and late payments
diminishes over time. If you have been making payments on time for at
least the last 12 months those negative entries will begin to
influence your score less.
-
At Current Address Less Than 3 Years
Lenders like continuity. A score will be higher if you have been at
the same address for 3 years or more. There may be some impact if you
have had two addresses in the last 3 years, but probably less if you
are a homeowner.
Multiple addresses in the last 3 years will have the greatest impact.
Likewise, your credit score may be effected if you have been at your
current address for less than 6 months. This means that tenants are
most likely to fall foul of this scoring criterion.
-
New Job
As with residency, when it comes to employment continuity is also
paramount. Ideally, lenders are looking for someone who has had the
same job for a number of years. Such applicants will benefit from the
maximum score for this.
Having had two employers in 3 years need not be that detrimental.
Changing jobs so as to get more pay will usually not cause any
problems, though you really want to have been in your new job for a
few months before applying for new credit. Remember, lenders often
ask to see the last couple of months pay slips when applying for a loan.
Since continuous employment is what they like to see, having 3 or
more jobs in the last 3 years will adversely effect your credit
score. As will having had bouts of unemployment between jobs.
-
No or New Bank Account
Lenders will award maximum points if you have been with your bank for
a number of years. Having only recently opened your current account
will reduce the score. Not having a bank or current account will be
most detrimental to your credit score.
-
Too Many Credit Applications
Every time you apply for credit a search is made and will be recorded
on your credit file. Multiple credit applications in a short space of
time will negatively impact your credit score. Such applications may
be perceived as indicative of someone desperately trying to obtain credit.
It is commonly accepted that making one credit application every
month or two should not have too much impact on your credit file.
However, if you have recently made a number of applications and been
declined, it is advisable not to make any new applications for six
months so as to give a good breathing space before applying again. It
also gives you time to review your credit file and determine if there
is anything on there which shouldn’t be.
