What is a credit rating.
When you apply for credit, the lender will score your application form, and then obtain a copy of your credit file from the credit reference agencies. He will inspect your credit file carefully, paying particular attention to your repayment habits with any other lenders that you have dealt with previously. Previous lenders will have gone to great pains to report all your borrowing and repayment habits in the last 6 years. Unfortunately where credit is concerned, your past record will be taken as a very real indication of your present (and future) creditworthiness. The new lender will also use this file to cross check that the information that you gave on the application form is true.

Is there a magic number for a good credit rating? Actually, even though there are calls for some sort of standardization and even in spite of some of the credit agencies now issuing a credit-score-guideline in the UK, there isn't a magic number. (Even in America where FICO scores are widely used, these are still not the leading factor in lenders' decisions to grant credit.)

However, whilst different lenders have different scoring techniques, they have a number of aspects in common. Indeed you will note that almost all application forms from all banks and credit card companies etc are almost identical asking the same core set of questions. Your credit rating is formed by the combination of positive and negative aspects of both your answers on the application form and the details held in your credit reference or credit history file. There are in fact a core of 11 questions used almost universally on all application forms and so knowing how to answer these questions to be as close as possible to the lenders golden expectations will stand you in very good stead wherever you decide to apply for credit.

Credit Rating and Credit Scoring
When you apply for credit, the lender will score your application form, and then obtain a copy of your credit file from the credit reference agencies.

For more on what lenders golden expectations are, "The Complete UK Credit Repair Guide" provides valuable information to help you answer questions on an application form to give you a better credit rating and a better chance of approval to get credit. For details about the guide please click here