How does a credit check work?
Credit checks
Whether you're applying for a credit card, personal loan, mortgage or store card, most lenders will carry out a credit check before accepting your application. In order to see that you're a trustworthy person who is likely to pay bills on time, they will usually perform the following checks.
Credit scoring
This part of the credit check is carried out by the credit card company during the application process. You will be asked to provide details about your employment status, your address, your current bank account and credit card (if you have one), and your income, among other things. The credit card company will then go through your answers with a points system, giving you marks for each answer. If your score is above the limit set by the credit card company, you will qualify for the card.
Credit reference agency
Your credit report file (or credit check file) began on the day you first opened a bank account, and records every credit card you've applied for, every late payment you've made and every loan you're paying off.
Most of the information on your credit check report comes from the companies you have credit with, such as banks, retailers and finance companies. The file also contains publicly available information such as your address and any County Court Judgements against you (CCJs).
Check your credit file
You have every right to check your credit file: the Financial Services Authority can help you with this. If you believe the information obtained for your credit check is incorrect, you may file a statement explaining why. Inaccurate information can be removed but no one can have accurate information removed from your record.
Try these sites for more help:
www.equifax.co.uk
www.experian.com
www.checkmyfile.com
Applying for a card if your credit check shows a poor result
Unfortunately, credit card companies offering lower typical APRs (Annual Percentage Rate) tend to have stricter credit check systems and are more likely to reject your application. With the uSwitch.com credit card comparison service you can compare the credit cards available that will accept applications from people with poor credit check results (or credit ratings). This will save you the hassle of having your applications rejected, which can also show up as a bad sign in future credit checks.
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