When you apply for a loan, a direct lender will disburse money after careful consideration of your credit report. It informs them of your credit standing. Of course, a loan company will be more looking forward to lending money to a borrower with creditworthiness than someone with an impaired credit rating. Several borrowers face unexpected rejection as they are told that their credit scores were not satisfactory.
Well, no matter which type of loan you take out, an online lender will take a look at your report. Since there are three major credit bureaus that maintain your financial record and the lender may contact any of them, you should get a free copy of your report from all reference agencies to make sure that it does not consist of any error that may wreak havoc on your financial life.
It is not surprising that your report shows up a default that is under your radar. The direct lender is likely to fail to inform of your settlement to bureaus or the agency may upload wrong information because of identity issues. There are a lot of reasons for having a wrong information on your report. Financial experts have found that due to wrong information on credit report, many borrowers end up taking out very bad credit loans with no guarantor from direct lender such as AOneFinance, British Lenders & The Easy Loans, which charge higher interest rates than bad credit loans.
Even if your credit score is poor, you should go through the report at least once a year to make sure that any unknown error does not damage your credit rating. However, there are several other reasons that you should check it periodically.
Your credit report will decide your credit score
Your credit score is a three-digit number calculated based on the information your report consists such as payment history, defaults, credit types, length of credit and credit utilisation ratio. If your score is less-than-fair, you will have lower possibilities to borrow money. Ask credit reference agencies to provide you with your credit report to check it does not contain any error from your personal details to financial details. Any error or unidentified default can degrade your score that means the lender may not even consider you suitable for a bad credit loan. Eventually, you will end up with either rejections or very high-interest rates. Make sure that your credit report is accurate and up-to-date.
To dispute errors
Since errors can call your creditworthiness into question, it is essential that you peruse your report to detect errors. Once you spot any error, inform the credit reference agency and request them to remove it as soon as possible. Remember that it may take 25 days because the bureau will contact the lender, wait until the next update, and then make any changes. You also confirm your lender that they inform the bureau of your every repayment. It will help boost your credit score.
To spot identity theft
Your credit report may have errors on account of stolen identities too. Identity theft is a deliberate use of your personal data to obtain financial benefits. This is very common error and may put you at risk. when you check your credit report, make sure that no one is using account in your name. It can cost thousands of pounds and take a couple of years to mend, financial experts say. Therefore, the earlier you spot any issue, the better it is. Make sure you check your report from all credit reference agencies. You will also have to inform cops. The report will act as an official documentation that all credit bureaus will require before setting off the investigation.
You are applying for a job
If you are finding a job in financial sector, your employer will likely run a credit check to analyse your credit score. You may not qualify for a job if your credit score is less-than-perfect as they may doubt that you can embezzle with money. Before applying for a job in financial sector, you should take a look at the report at least once to make sure your credit score is at least fair. However, some employers may ask you a reason behind an impaired credit rating. They will not deny you the job if you give a genuine reason why your credit score is not stellar.
The bottom line
Whether you want to take out a loan or apply for a job in financial sector, you must have a good credit score. You will get a deal with affordable interest rates only when you your credit score is good. Sometimes borrowers struggle to borrow money only because of poor credit rating. A lender will not tell you the reason for turning down your application, but the significant reason is poor credit rating, and not everytime your score will be poor due to your financial irresponsibility.