Covid 19 Status

In line with HM Government requirements to fight the spread of Covid-19 we have measures in place to ensure that we protect our staff, their families and the wider community, but also to ensure that there is minimal disruption to our customers.

Your access to online Multi Agency Credit Reports, Expert Help and Account Management remains unaffected. We take great pride in the support that we provide to our customers and throughout this period will do all we can to minimise the impact on our services. While the country remains in lockdown we will continue to support your queries via a dedicated and experienced team that will be securely working from home, and supported by a Management Team that will continue to be based at our head office and who will be able to provide customer support as required.

The security measures that we have in place to protect your Personal Data, in line with our Privacy Policy, will mean that some elements of our personalised support are affected during this period as our support team will be working with anonymised data when working remotely. Freephone access to our Credit Analysts has been removed during this period while we focus our efforts on continuing to reply to all of your emails and secure messages within one working day.

Thanks for your understanding, and we hope to have full customer support available as soon as possible and wish you well during these challenging times.

CREDIT REPORT SERVICES AND ONLINE EXPERT HELP ARE FULLY OPERATIONAL - PHONE LINES ARE CLOSEDCOVID-19 STATUS

ONLINE SERVICES FULLY OPERATIONAL
PHONE LINES ARE CLOSEDCOVID-19 STATUS

Creditworthiness and Affordability – Which is Which

Posted by Ben Tumilty in Credit Reports on 22 February 2019 - Ben is a Credit Analyst at checkmyfile

When reading the small print on most applications for credit, you’ve probably noticed two words regularly popping up: Creditworthiness and Affordability. Both of these measures are used by a vast majority of lenders when assessing your application, so understanding what each one means goes a long way to explaining why you may or may not be accepted for credit.

Each lender will place their own value on each type of information, and as such one might be more important than the other to some lenders, but you could see a complete reversal from others. Ideally you should aim to be able to prove both in order to impress lenders.

What is Creditworthiness?

In essence your Creditworthiness is how you have – and how you continue to – maintain your credit agreements. By seeing whether or not you have met your repayments on time in the past, or if lenders have had to chase you to reclaim debts owed, a prospective lender can work out how likely you are to make their payments too.

In addition to your credit history, elements such as whether you’re registered on the Electoral Roll, if you have any Cifas entries and in some cases, any security against the loan, are factored into your Creditworthiness.

This is irrespective of the balance on your credit accounts, and as such the amounts in question on each of your credit agreements are unlikely to impact on how lenders view your ability to meet your repayments.

What is Affordability?

In essence Affordability looks at whether you can afford to make the required monthly payments for a credit agreement, taking into consideration your monthly income and any other regular outgoings if your application is successful.

Lenders also look into the amount you already owe as part of assessing your overall Affordability. If you are applying for credit, particularly any form that requires consistent payments over a sustained period, lenders will look at the amount of outstanding credit you currently have.

Similarly, if you already hold a number of credit cards which give you a large amount of available credit and you apply for another credit card or unsecured credit such as a personal loan, hire purchase or a lease purchase, lenders may decline you on this basis. If it looks like you would struggle to repay all your credit agreements if you ‘max them out’, lenders are often reluctant to offer you more credit and risk making this situation worse, even if there are no signs that it’s something you’re likely to do.

The Affordability aspect of your application for credit is not shown on your Credit Report, although your active credit agreements and their balance will show, and this information is factored into a lender’s checks. For some credit applications (usually when borrowing larger amounts, such as a loan or mortgage), you may need to provide proof of your income and outgoings before being assessed by a lender.

Increasingly, lenders are being held to responsible lending policies, which means they have to ensure the customer can not only afford to make payments, but that they can do so comfortably. To do this, your finances are sometimes ‘stress tested’ to see if external changes (such as an increase in the Bank of England Base Rate, changes to their income and higher outgoings) would prevent you from being able to make payments.

What’s the difference?

Although on the face of it the two seem quite similar, they are effectively two sides of the same coin. Affordability looks at whether you’re able to afford a loan and Creditworthiness assesses how likely you are to actually pay it.

Say for example you’re a millionaire with a six-figure salary that’s never taken out a loan or form of credit in your life. Even if you could easily make the monthly loan repayments, you might not be granted one because without any Credit History to your name, lenders won’t be able to see any evidence of how reliably you’ve managed payments in the past. In this case you’d have great Affordability, but poor Creditworthiness.

Alternatively, if you had a spotless Credit History from several credit cards, active loans and a mortgage but only just enough income to pay for it all, you’d have excellent Creditworthiness, but poor Affordability, and most lenders would think twice before offering you credit.

That’s why it’s important to be able to demonstrate both to potential lenders for the best chances of getting accepted. We always try to emphasise the importance of your Credit Report but if you cannot afford to repay what you are looking to borrow then you will certainly find it difficult to obtain the credit for which you are applying.

If you haven’t already, you can try checkmyfile FREE for 30 days, then for just £14.99 a month afterwards, which you can cancel online, by phone or by email.

Updated 22/02/2019 by Jamie Mackenzie Smith

How to separate your Credit Report from an ex-partner

Separating your Credit Report from an ex-partner or spouse is easier than most people initially think. You might be wondering exactly how another person ends up recorded on your Credit Report, whether they are damaging your Credit Score, and if there’s anything you can do to remove them.

Published on 8 Apr 2020 by Sam Griffin

Full Article

How Your Phone Contract Affects Your Credit Report

Some people only really consider their Credit Report and the information it contains when they’re about to apply for a traditional form of borrowing, such as a credit card, loan or mortgage. That's why for some it can come as a bit of a surprise to learn that many of the same checks are involved when attempting to take out a mobile phone contract.

Published on 6 Apr 2020 by Tom Magor

Full Article

Guide to Financial Associations

It's not uncommon for someone checking their Credit Report for the first time to notice information that’s out of date or simply inaccurate – but by far one of the most frequent offenders for this is the record of a Financial Association.

Published on 24 Mar 2020 by Sam Griffin

Full Article

Can Right to Erasure Get Rid of Bad Credit History?

General Data Protection Regulation (GDPR) was introduced on 25 May 2018 and, unless you’ve managed to avoid the internet and checking your emails completely since then, you’re likely to have been bombarded with messages from nervous sounding websites updating their privacy policies.

Published on 5 Mar 2020 by Jamie Mackenzie Smith

Full Article

Will checking my credit report affect my credit score

Does checking your Credit Report lower your Credit Score? This a question we’re regularly asked, especially as the importance of Credit Reports is becoming more widely understood. The question seems to be based on a simple idea: when someone else checks your Credit Report, it damages your Credit Score, so it must also be true when you check it yourself. Thankfully, this is far from the truth.

Published on 26 Feb 2020 by Kelly Luff

Full Article

How to remove Financial Associations

A Financial Association is another individual with whom you’ve had some financial connection – usually a spouse or partner or family member. Once a Financial Association has been created, it will remain on your Credit Report indefinitely, until you manually request to have it taken off.

Published on 24 Feb 2020 by Sam Griffin

Full Article

Other names on my Credit Report

Your Credit Report is a detailed record of your financial history – one that is central to all sorts of major life events, like applying for a mortgage, a new car, or even a job. Unexpectedly finding another person’s name on your Credit Report can therefore understandably cause a bit of a shock.

Published on 19 Feb 2020 by Sam Griffin

Full Article

The Advantages of a Multi-Agency Credit Report

These days your Credit Report can be checked for any number of reasons throughout the year, including background checks during job applications, landlord checks and even from insurance or utility providers when you shop around for quotes.

Published on 14 Feb 2020 by Paul Anderson Riley

Full Article

Disputing a Late Payment or Arrears Marker on your Credit Report

Many of us have been there – we have too many things on our mind so we may have missed a payment on our credit card or loan. But what happens when you check your Credit Report and spot a late payment or case of arrears that you know aren’t correct? Where do you stand and what can you do to rectify the error?

Published on 7 Feb 2020 by Kirstie Brown

Full Article

Why do organisations share my personal data?

You may have seen recently that Lewisham and Greenwich NHS Trust has been sharing patient data with the Credit Reference Agency, Experian.

Published on 4 Feb 2020 by Sam Griffin

Full Article
keyboard_arrow_left

keyboard_arrow_right

We are rated number 1 for customer service on