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Bad Credit 

What lenders look for when assessing your credit report 

Before a lending decision can be made, various pieces of information about your credit history will be assessed. In addition to your credit score, we have provided a list of factors that lenders assess when you apply for a service or product on credit.

Information on your credit report

This is more than just your credit score; this means the information behind your credit score that is held by the credit reference agency. Companies often then use various pieces of this information in their scorecards to make a decision.

Your application information

The information you give in your application is used to judge basic criteria. For instance, it will check if you are over 18 and legally eligible for credit products.

Affordability assessment

This is always relevant if you are applying for a product or service on credit.  In an affordability assessment, the lender will ask for your income information. At Oakam, this can include one or all of the following; your salary, benefits or pension credit; not all lenders will take benefits into account.   This will also involve checking what your outgoings are; everything based on these factors will determine if you can afford the repayment amount.

It is important to be as accurate as possible when declaring your income and expenditure. For example, the lender may know the typical monthly payments for rent, or the rough amount of an energy or water bill.  They can use this information to determine if the expenditure information submitted is roughly in line with what they would expect.  Lenders will use this to validate the affordability assessment. If a figure is outside these expected ranges, you may need to provide a bank statement or other documents to validate and complete the application.

As with most things in life, being as accurate as you can with your income and expenditure is the best way to help a lender make a decision on your application. Although, we don’t expect you to know your bills to the penny off the top of your head – if you do though, then great!

ID verification

The last common item a lender will check is that you are truly the person you say you are in the application form. If a lender is unable to verify this automatically, it can be another reason they need to ask you for documents.  This also is used to help fight fraud, money laundering and other illegal activities.

It’s important to make sure you keep your details up to date. If you have recently moved, you need to let your bank know.  Often a lender will try to match your personal details to those held on the bank account number you provide.  This is also one of the reasons lenders ask for your bank details up front on an application, rather than later, when you may have decided to take a loan.