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Average Credit Score Level Needed for a Loan

Whenever you apply for any kind of finance you will be credit scored. Companies take information from credit reference agencies to judge your ability to pay back the finance, or how trustworthy you are; the actual credit score level for a loan depends entirely on the provider. There is no fixed "score" needed to apply for a loan but there are certain factors which will affect your credit score and therefore you ability to obtain a loan.

 

Address Information

The credit score level for a loan will depend on whether or not you are registered at your current address. If credit reference agencies have the address registered which you use to apply for a loan you will have a better choice of obtaining finance; you must also ensure you previous addresses (if you have any) are also correct. Being on the electoral register for your current address or having contracts at your address (i.e., a home landline) is normally enough to prove your residency.

 

Previous Finance

The amount of finance you have applied for in the past will also affect the credit score level for a loan. If you have applied for several loans or credit cards within a 6 month period you might find it difficult to find a loan; lenders see this as a "desperate" attempt or need for finance and multiple applications (or rejections) will leave you with a negative credit score.

 

Missed Payments

Despite popular belief having a perfect credit score won't always work in your favour. If you always pay loans back on time and never incur charges you can still get a loan, but missing a few payments here and there may improve your "desirability" for a loan by lenders. Lenders judge applicants on their "risk"; an applicant who has never paid back a loan at all is considered too high a risk to offer finance to, but someone who has occasionally missed payments is considered a low risk and normally more desirable by the lender because a few missed payments will mean extra profit for the lender. You're more likely to be declined for constantly applying for finance in a 6 month period than you are for missing a few payments.

 

Accurate Information

All your personal information is collected by credit reference agencies. When you apply for contracts or open a bank account your address, sometimes employment and previous finance is recorded. In some instances your income is also assessed. If you don't provide accurate information the credit score level for the loan will be too low; providing information that accurately matches information held by credit reference agencies will improve your chances of getting a loan. If you provide accurate information but are still declined, contact credit reference agencies to receive your credit report and rectify any mistaken information on your credit file.

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