credit-explained-dp-guidance

6 How do lenders decide if they will offer me credit?How do lenders decide if they will offer me credit? 7What is credit scoring?• When you apply for credit, some lenders use credit scoring to help themdecide if you are likely to repay. Credit scoring enables lenders to look ateach credit application in the same way. Lenders should tell you if they aregoing to use credit scoring.• To work out your credit score, lenders may look at your applicationform and give points to some of the information on it, such as your age,your job and if you own your own home. Lenders may also give pointsto some of the information on your credit reference file.• Each lender will have its own credit scoring system and will decide howmany points to give each piece of information. For example, if a lenderbelieves that people in a certain age group are more likely to repay,the scoring system will reflect this. Each lender will also decide howmany points you need to reach its own ‘pass-mark’. If you score aboutthe pass-mark, you are more likely to be offered credit. So you may findthat you can be refused by one lender but accepted by another.The previous occupants of your address cannot affect your credit score.Also, credit scores do not take account of your sex, religion, race,political beliefs, sexuality or criminal record.Refused credit?• If a lender uses credit scoring and you are refused credit, you can ask thelender to explain the main reason why. There could be a variety of reasonswhy the application was declined, for example, there may be informationon your credit reference file that the lender thinks is negative. Or perhapsyou did not reach the lender’s pass-mark. Lenders may also try to makesure they do not offer credit to people who may not be able to afford it.So even if you repay your existing credit accounts on time, a lender maynot want to overburden you with more. You should be aware that lendersdo not have to give you details of how their credit scoring works.• If a lender refuses you credit because it worked out your credit score justby using a computer, you can ask it to review the decision.• If a lender did not just use a computer to work out your credit score andyou have other relevant information that you think will alter the decision,you can ask the lender to review it.• When asking the lender to review the decision the lender may ask forevidence to support your appeal.• Even if a lender reviews its decision, it may still turn you down.• Different lenders use different systems for working out your score andif you ask them, they must tell you which credit reference agency theyused to get the information about you. You can then check whether theinformation they used is right.123456