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Understanding Your Credit Profile

Do you understand your credit profile? If you don't, it's time you did. Banks are cracking down on lending criteria and people are finding it harder to get bank loans. The more people get rejected for credit, the stricter the regulations get.

According to MoneyExpert.com 1.7 million people have been turned down for credit cards in the last 12 months. In the same period 1.5 million people had their loan applications rejected and 260,700 people were turned down for mortgages.

Most people are turned down because of a bad credit report, yet this remains an area that is poorly understood. A credit reports allocates positive or negative scores according to certain criteria. This can relate to areas such as:

• whether you own or rent your home
• how much debt you already have
• what type of employment you have
• whether you have savings
• whether you've been turned down for credit

Each factor has a score and the total score determines whether you get credit and what kind of interest or repayment period you might be eligible for.

MoneyExpert's research that many people who had been turned down for credit said they would apply again, some of these to the same lenders. This is a no-no. It's far better to assess your credit situation in advance.

Luckily, you don't have to wait till you're ready to apply for credit to find out what your credit rating looks like. Most credit reports are handled by Experian or Equifax and for a small fee you can get a copy of your credit report. That means you won't get any nasty surprises when you apply for credit.

The credit report will have a list of all your loans, credit cards, loan applications and so on. Each of these shows a payment record. Anyone looking at the credit report can see how long you've had the credit and whether you've paid on time.

People can improve their credit rating by paying on time, being on the electoral roll and reducing outstanding balances. That tells lenders that they are a good credit risk.

MoneyExpert.com has also launched a free credit profiling service to help people understand their profile. The free tool will assess your credit rating and help you to find lenders who are appropriate to your credit history.

This means less chance of being declined for credit, which is good for people and for lenders.