What can a creditor see on your credit report?
When applying for short term loans, you might start to worry about your credit score. So, what information do potential lenders use to decide if you will be suitable for a loan?
Can lenders see if you have applied for a payday loan or a short term loan before? When providing or extending a short term loan, is your credit score the only thing that is taken into account? What about applying for a loan with bad credit?
A credit report can seem complicated and daunting at first, but it shouldn’t be feared. Lenders will always use your credit report when checking if you’re eligible for any form of loan. However, don’t worry about what they contain or how they’re used.
Firstly, the credit report is used as a tool for identifying you. It features your legal name, home address, employment information, birth date, and national insurance number.
This part of the application process does not really effect the actual calculation of a credit score. Although, it can determine whether or not the information that you have given to the lender when you applied for new credit is accurate.
All of this information needs to be complete and 100% truthful. Employment information is also important. Creditors must confirm that the individual provided with a loan has a means of paying it back.
One of the details on your report will be a history of your previous credit such as credit cards, a car loan or any other loans. Also included is current credit including the date it was started. It includes the amount you borrowed, your current balance and a history of your recent payments.
This will also show if you’ve been late in making repayments which is important to lenders when assessing if you can afford to repay. If you’ve had trouble repaying in the past, it doesn’t mean you can’t borrow in future, just that the amount the lender will give you may be smaller to better fit your income.
There will also be a list of everyone who has run credit for you over the last two years, including voluntary inquiries (requests you have made) and involuntary inquiries (when a lender or other agency requests your report).
Public Records & Collection History
This information is also available from public records, and includes bankruptcies, insolvency, home repossessions and unpaid debt or if you have ever committed fraud. This is all important information that lenders will use when it comes to reviewing your credit report to determine whether they are likely to provide you with additional credit such as a loan.
Ultimately, your credit score and report will tell creditors what types of credit you have used. It will show whether or not your accounts are in good standing. This will help to show how dependant you are on credit. It can reveal how reliable you are at repayments, and whether you have recently been sourcing new forms of credit. For example, if you apply for a short term loan this will leave a footprint on your credit report for 12 months – whether you are accepted or not.