When you apply for new credit the lender carries out a calculation known as “credit scoring”. This is basically a way in which the lender can assess (or calculate) whether you have the ability (and good standing) to pay back any finances that they lend to you. This is done by looking at your past credit record, your time with your employer and many other variables for assessing their risk. (It’s a bit like a motor insurance company calculating rates to charge for a particular type of vehicle with a particular type of driver, whether you have a no claims bonus etc, etc). The lender is only interested as to whether you are a good or bad customer and they employ different rules for calculating their risk.  In some circumstances they may be prepared to lend money to a certain individual who’s calculation is not perfect but at a slightly higher rate of interest to reflect the risk involved.  When you complete an application for credit your answers will be given a “rating”.  The application form is designed to extract certain information from you to build up a profile about you, your history and assess whether you are a good or bad risk compared to information they have from other people they currently lend to or have lent to in the past. Although you cannot know what constitutes positive and negative credit scores (different lenders keep this a secret as it forms part of their risk management system) it is a fair assumption to say that if you are stable in your job, own a house and have children, pay your bills and meet your financial commitments on time then you will get a positive rating.  Each and every assessment is done individually and the calculation formula evaluates all types of information on your credit report and compares it to information contained in millions of previous individuals credit files. If your application is declined it’s a good idea to obtain a copy of your credit file from one of the credit reference agencies. Because there are many variables thrown into the credit score calculation it may be that someone who lived at your property in the past had a bad credit record and it has been associated with you, or another person has fraudulently obtained credit in your name, so it’s always good to check these things out. Credit is not a right but you are however entitled to know why you have been turned down for credit and most lenders if you contact them will tell you in principal the reason why your application has not been successful. This website has been designed to provide our users with access to all of the major lenders offering all types and variations of loan within the UK. Please note we are an advertising medium and do not therefore endorse products or give any financial advice relating to the products and services offered by the advertisers on this site.