Creditworthiness

What is Creditworthiness?

Creditworthiness is the term used to describe how attractive a prospective customer you appear to a lender, based on the information found on your Credit Report. A lender wants to be confident that they are lending to someone that is reasonably likely to repay the money owed without having to resort to Defaulting the account. A Creditworthy borrower is less likely to Default on payments, so are more appealing to lenders and thus more likely to be offered credit.

Numerous factors are used to determine Creditworthiness of the borrower, including previous borrowing history and public information such as Electoral Roll status and the presence of any CCJs.

In the US, lenders sometimes go by the “Five Cs of Credit" to assess Creditworthiness. While this system is not referred to by name in the UK, the same principles are still used by lenders. The Five Cs are:

  • Credit History: The borrower’s past repayment history.
  • Conditions: This refers to the conditions of the loan itself, which can include the interest rate specified by the lender as well as the purpose of the loan.
  • Capital: This refers to any deposit or down payment paid in relation to the loan. For many lenders, the bigger the deposit paid, the more likely they are to take on the customer because it presents a smaller risk of losing money.
  • Collateral: Similarly to Capital, a lender may be more inclined to loan credit if something is offered as collateral that the lender can sell to reclaim any losses incurred as a result of the borrower not making payments.
  • Capacity: The borrower’s ability to make the monthly repayments on top of their present commitments, as well as how long the borrower has been at their present job, implying a level of stability.

A Credit Score is effectively your Creditworthiness in number form, but this should always be taken with a pinch of salt, because no two lenders will assess the information on your Credit Report the same way, so your score may not guarantee a successful credit application.


Q: How does it appear on my Credit Report?

A: Your Creditworthiness is loosely attributable as your Credit Score. Your score should, in theory, show how receptive a lenders might be to you as a customer as a result of seeing your Credit Report.

By checking your Credit Report, you will immediately be able to spot any potential issues that lenders might find while assessing your application for credit, giving you the best indication of how Creditworthy you are. If you haven’t already, you can try checkmyfile, the UK’s most detailed Credit Report, FREE for 30 days, then for just £14.99 a month afterwards, which you can cancel online, by phone or by email.

.

Jargon Buster

Use the links below and the resulting list of terms on the right to locate the term you are looking for. If you can't locate it, please get in touch.

A
B
C
D
E
F
G
H
I
J
K
L
M
N
O
P
Q
R
S
T
U
V
W
X
Y
Z
keyboard_arrow_left

keyboard_arrow_right

We have loads of great customer reviews