BORROWING ZONE - Credit rating

UK Credit File, Credit Rating & Credit History

Before banks, retailers or other businesses lend money (or offer credit) to their customers, they must evaluate the likelyhood that the customer will pay back the loan in the manner agreed. In other words, the lender must evaluate the risk. To do this, the lender will do three things.

Firstly, they will establish a profile of the customers income, current liabilities & planned spending - this is normally effected by asking the customer to complete a questionaire.

Secondly, if they deem that the client seem to have sufficient margin to service the proposed loan, they will evaluate the customers credit history. There are two parts to the customers Credit History - Internal & External. Credit history is simply a history of how the customer has managed his past (and present) credit transactions.

Finally, the lender will evaluate the above data in accordance with their lending policy, resulting in a decision of whether or not to lend.

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