What Does a Lender Look for in a Credit Score?

If you are trying to secure a loan, then you may be wondering about your credit score and whether the lender will find it to be acceptable. This is something that it is worth thinking about because most lenders will be looking for certain things on your credit report. Although it is not possible to know exactly what they will be looking for, as they are all a bit different in what they offer, it is still possible to think about the sorts of things that might impress or not impress them.

Making Regular Payments

Many lenders will want to check that you make regular payments and they will use this as a guide to whether you will be a good person to lend to. They will often require you to make regular repayments on their loan and this means that they will want to see evidence that this is something that they think that you will be capable of. If you have already got a loan and you make all the repayments on time then they will see this on your credit report and they will be impressed by that. They will also look at other regular payments that you might make – things like utility bills and if they can see that those are being made on time, they will be happy with that too. If you do not have any loans, then make sure that you have your name on utility bills or things like this so that there is definitely a record that you are making payments.

Being in Control of Money

A lender will also want to see evidence that you are in control of your money. They will be looking hard to see evidence that you are managing well. This will include things like making sure that you are not applying for too many loans and particularly that you are not being turned down when you apply for loans. If you apply a lot, they may think that you are constantly running out of money and therefore not managing to control your situation very well.

Ability to Repay

They will also be thinking about your ability to repay the loan. They will look to see what loans you have already and think about whether that might make it hard for you to also find the money to pay your repayments to them. They will also look at your income and think about whether they feel that will give you enough money to be able to comfortably pay them the money that they need.

It is worth bearing in mind though, that there are some lenders that will not take your credit score into account. Short term lenders will lend to most people regardless of how well they are managing financially. They will, however, want to see proof that you can repay the loan by only lending you a small amount of money. If you repay that on time, they will then be prepared to lend you more money as you have built up trust with them. As these lenders are taking on a risk, by lending to those that have not had a good past record with money, they will charge more money than some other lenders. So, it is worth bearing this in mind. Whenever you take out a loan, it is always worth thinking about whether you feel that it offers good value for money though. So, find out how much it will cost you and you will then be able to decide whether you think that it is worth paying that much money just for getting out a loan or whether you feel that it is better to not get it out and to not spend the money after all. Obviously, this will very much depend on what you are spending the money on.

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