Risk Based Pricing

What is Risk-Based Pricing?

Risk-Based Pricing refers to the concept of adjusting the interest rate offered by lenders to reflect the chances of the borrower defaulting on payments.

Having determined your Creditworthiness and overall Affordability, a lender will then set an interest rate based on this, with a view to recuperate potential losses caused by debtors failing to make payments

This is in part why you may not get the advertised APR if you apply for certain credit products.


Q: Will all lenders rate me as high-risk?

A: No. Each lender will have their own interpretation of how much of a risk you pose for defaulting on payments, so you might find if you shop around you might be able to find lenders willing to offer you a better deal elsewhere.

You might also find that the lender’s criteria may change from product to product, so if you’ve been deemed at high risk of defaulting for a loan or credit card, you might have better luck with another product from the same lender.

Q: Can I see how my risk is determined?

A: You won’t get to see the criteria used by lenders to work out your risk of default, but you can see the information they’ll assess on your file by checking your Credit Report for yourself.

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.

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