What is a credit check and why does it need to happen?

What is a credit check and why does it need to happen?

FinanceAcar is able to help car buyers with all types of credit history.  However, bear in mind that before you are approved to take finance from a lender for anything (whether that is to get a credit card, buy a house or buy a car) the finance company will request that it can undertake a ‘credit check’ of your credit history to verify your identity and your ability to make repayments.

If you’re over 18 and have a history of taking credit, it is most likely that you have a credit report held by a credit reference agency.  Your credit history specifies how you have managed your credit including mobile phone contracts, mortgages and credit cards. This report provides a summary of your credit accounts, repayment record and how well you are coping with your finances.

No-one can access your report without your permission.  If you are applying for credit and have approved access to your report, it will be used alongside the information on your application in order to make a decision on whether or not to offer you credit (usually by calculating a credit score for your application).

Lenders use this information to assess how much to charge you for taking the credit – people with a very good credit record will most often obtain lower interest rates. Provided that you have not missed more than one payment on a loan/credit card or had any credit problems (demands/CCJ) in the last 12 months your credit profile should enable you to obtain finance. If you have missed some payments then your credit rating will be affected and depending on the severity and frequency of your missed payments you may not obtain the specified rate/price for a product.

When applying for credit, you should always be truthful about your credit history because once a credit check is conducted your true history will be revealed. Also, if you have been rejected by a lender recently, it is important to declare this so that steps can be taken to ensure that your application is put with a lender most likely to accept you. Trying to obtain finance from a lender that is likely to reject you because they only take people with a perfect record will actually further damage your credit history.

You can see your credit report and learn how to improve your credit history whenever you like by using websites such as www.creditexpert.co.uk


Read more about credit and getting credit approval.

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