What is...

Creditworthiness

Creditworthiness is a measure of how attractive a prospective customer appears to a lender, based on the information found on their Credit Report.

How does Creditworthiness appear on my Credit Report?

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

By checking the detail within 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. checkmyfile lets you check and compare what is being reported by Equifax, Experian, TransUnion and Crediva in the same report – making it much easier to spot potential errors or gaps.

If you haven’t already, you can try the UK’s most detailed Credit Report free for 30 days. After that it’s just £14.99 a month, and you can cancel at any time online.

Why is Creditworthiness important?

A lender wants to be confident that they are lending to someone that is likely to repay the money owed without missing repayments, or worse, defaulting on the agreement. A creditworthy borrower is less likely to default on payments, so are more appealing to lenders and thus more likely to be offered credit.

What affects my Creditworthiness?

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

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 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: More commonly known as ‘security’ in the UK. Similarly to Capital, a lender may be more inclined to loan credit if something is offered as collateral —the lender could then sell the asset 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.

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