18 Mar 2010 Tell a Friend
New research from lender Kensington reveals that more than 10 million UK residents could fail an automated credit score because they have insufficient credit history to be considered a reliable borrower.* Lenders operate strict credit scoring for mortgages, personal loans and credit cards to try and calculate how 'risky' a customer you would be.
The credit scoring system differs from lender to lender, and you will never have one single score across all lenders. This is because some lenders specialise in lending to certain groups, such as first-time buyers or those with previous debt problems, and therefore their 'ideal customer' will vary.
However even though there is no universal credit score for each potential customer, there are some criteria that will land you in the doghouse with the majority of lenders. We take a look at all the reasons you may be rejected for credit, even if you are a responsible borrower.
1. You Have no Credit History
You'd think it would be a good thing that you'd never needed to borrow money before, wouldn't you? Not so. The main reason that lenders give you a credit score is to determine the likelihood that they'll get their money back with interest if they lend to you. If you have no previous record of borrowing money, they have no way of knowing if you're reliable and therefore are taking a much greater risk by lending to you.
Boost your score by: Getting yourself on the radar as a responsible borrower. If you plan to make a mortgage application soon, start by taking out a credit card and making sure you pay off the full amount each month. Make sure you don't spend more than you would normally - perhaps plan to just use the card to buy groceries and petrol.
2. You're not on the Electoral Register
If you are not registered to vote at your current address, this will put a black mark against your name as a potential borrower. Credit reference agencies - the organisations that hold our credit reports - update their records from the electoral roll each month, and if you are not found there, this makes you seem less of a solid prospect for credit.
Boost your score by: Getting registered straight away. As updates happen monthly, you'll see a relatively quick improvement to your credit rating by registering to vote. Get in touch with the Electoral Services department at your local Council to register.
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