There is no universal list that can help you understand what the banks look for when considering finance approval. This also means that there is no blacklist. While one provider may decline your application, another may be happy to go ahead with the lending. Banks use a range of information from various sources, with their decision being based on three primary components:
- The application form, which will include information regarding your address, postcode, salary and whether you’re a homeowner. It’s imperative that you ensure all details on that application form are accurate and correct. Even tiny mistakes can cost you the approval.
- If you’ve dealt with the finance company before, this may be looked at. If you’ve been a reliable borrower in the past, this will go in your favour.
- The credit reference agency files are a bounty of information for the banks, including electoral roll details, court records (CCJs, bankruptcy etc.), search data (who else you may have applied for finance with recently), address and link data (who else you may be connected with, such as a spouse) and fraud data.
They will also consider information regarding account data, which helps them to see what sort of borrower you are with your other finance providers, such as utilities, credit cards, and your mobile phone account and store cards. Shared data will also flag up any default payments you may have had with phone and energy providers.
The lender will use this information to generate a score and if they deem you to be a reliable borrower, you will likely be approved your finance. The decision is usually computerized; taking everything the system has access to into account to provide an accurate credit history check.
The better you are with your money, the higher the chances of a successful application. Even if you have damaged your credit score in the past, now is an ideal time to start building it back up again.
This is a guest post by Ivan.