Does Having A Secured Loan Affect Credit Rating
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When you make a request for any sort of credit, whether it is a credit or store card, a mortgage or a loan, for example, you will undergo a credit check by the lender that you are approaching for credit.
A credit check is a method that allows a potential creditor to look at your previous and present financial history, including whether you settle your debts on time, are late in making payments, or have not made payments. A credit check also reveals any outstanding amounts and also any County Court Judgements (CCJ's) and other defaults.
This then offers the company a report of what degree of risk you present should they decide to offer you a loan - and the probability of getting the money back! Of course, there is no one who is willing to give money to someone who doesn't make payments on time or not at all! This checking procedure is called credit scoring.
There is a number of organisations who store this data concerning you - the best known are Equifax and Experian.
In the event you are making a decision about applying for credit, get hold of a copy of your credit file first. This will allow you to see if all the information on it is correct and point out anything that is questionable. For example, only a tiny bit of wrong information - say your file indicates an unresolved debt that has been dealt with - could be the difference between being granted some kind of credit - or not.
To get hold of your credit record you can contact a credit record agency. They will charge you a small amount (approximately £2) and they will send you a copy for you to look through.
Make sure that your file records you on the electoral roll - if you are not there, this will have a negative consequence for your score. Also, financial 'associations' - where maybe a person who lives with you or has lived at your address previously has a low credit rating - will have an influence on your chances of getting credit.
If you come across information that is false on your file, report it, in writing, to the company who has given faulty data about you, and forward a copy to the credit reference agency too.
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