Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk
3 January 2018

Does My Credit History Matter?

Having a good credit score these days is essential as society becomes increasingly reliant on using credit to make purchases. This is particularly the case when it comes to the home buying process, credit card applications and secured loan products, as lenders (with the exception of the majority of payday loan lenders) use credit scores in order to decide who they will provide forms of credit to. 

This decision-making is also applicable to other types of personal loans. However, it is becoming more common for businesses to extend the importance of having a good credit score to a wide variety of products or services, not just for personal loans, but for all nature of long and short term loans online as well as those available on the high street. 

Utilising your Stepstone Credit facility however means that with a credit facility of up to £500, you can show an increased degree of responsibility; only drawing down exactly what you need and nothing more; something made very easy with our user-friendly features and mobile application. By doing so and by paying off the loaned amount on time or even early, future lenders will see an increase in positive financial behaviour by the borrower.

What is Credit History?

When banks or lenders decide who they will accept for a loan, it is common for lenders to check people’s credit history as it enables banks to gauge how feasible it will be for a person to be able to make repayments within a certain time frame. 

As lenders are not obligated to accept anyone for a loan who is deemed a risk, they can freely decide who to choose. The better the credit history and score in general that one has, the more chance of being accepted for a loan, or receiving a better interest rate when borrowing money from a mainstream lender or payday lender in general. 

Factors That Can Affect Credit History

Credit reference agencies often provide guidelines on how scores are put together to build a picture of one’s history. Certain factors have more significant an impact on credit histories (with information provided not by borrowers, but by institutions such as credit card companies, retailers and banks) including: 

  • Length of credit history recorded
  • The number of bank/credit accounts the person who is applying has
  • Type of accounts
  • Payment history and amounts owed
  • Available credit
  • Late payments
  • Exhausting spending limits
  • Defaults on file
  • Over-borrowing

With Stepstone however, we don’t believe that one’s future should be dictated by a few mistakes in one’s past. Therefore, we perform a 90-day bank scrape to build a much more accurate picture of an applicant’s credit and financial history and behaviour. 

This means that we are able to lend more responsibly and that borrowers are better placed to repay their borrowed amount on time or early. We take your financial behaviour over the past 90 days into account as part of the bank scrape process, which means that an anomalous CCJ or similar mark on your credit history doesn’t necessarily preclude you from using Stepstone credit’s payday loan alternative facility.

Why is My Credit History Important?

There are numerous reasons as to why one’s credit history remains important such as:

It Affects Where a Person Lives – Many people rely on receiving a mortgage from lenders in order to purchase a house.  If there is a low credit score rating, banks are much less likely to provide a home loan, as it is deemed a risk. If accepted for a mortgage, it may be the case that the interest rate added to the monthly repayments is higher than usual if a person’s credit history is unfavourable. 

It Can Affect Mobile Phone Contracts – These days, having a mobile is an essential product in most people lives, and often consumers prefer top of the range phones too. A bad credit score can affect one’s ability to get a mobile phone contract. This might be surprising, but in certain respects a mobile phone contract works in much the same way as any other type of personal loan, with the company expecting the phone to be paid back over the next 18 to 24 months much like any other repayment scheme.

Getting a Job – It isn’t always the case, but it is becoming increasingly common for employers to run a credit check on someone who has been hired (or on whom they are considering hiring). Whilst checking someone’s credit score does depend upon the industry in question, an employer may nevertheless want to see how responsible the future employee is with finances and this could result in being turned down for a role. However, it is important to note that a credit check cannot be run without the employee's permission, but refusing the employer could run its own risks.

Starting a Business – There are many costs involved when it comes to running a business, and as a startup company, people find that it is necessary to request a large loan from the bank to get started. However, a poor credit history may make this more difficult, or a person may be declined immediately.

How to Check Your Credit History

In the UK there are three main UK credit reference agencies - Experian, Callcredit and Equifax. These companies often provide free trials, allowing people to check credit scores at no expense. Different credit reference agencies record different information, so score may vary from one lender to another. Generally speaking, a higher score is positive across these companies, and it is worth getting a credit report each year, to keep up to date and to check for any discrepancies. It is important to note that credit scores are updated whenever a new request is made and new information may change the existing score.

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Stepstone Credit is a trading name for Hymarc Ltd and is registered at:
The Southborough Centre The Warehouse, Draper Street, Tunbridge Wells, England, TN4 0PG. Authorised and regulated by the Financial Conduct Authority No 683980

Hymarc Limited is a registered Data Controller under the terms of the Data Protection Act 1998 with a registration number of ZA 098144

Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk