Credit Score vs Lender Score: Avoid The Trap

May 21, 2018 Icon 3 mins read
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We’ll start with the bad news.

You might think that checking your credit score is the first step in borrowing money. If so, you’re mistaken. The current system for borrowing is rigged against consumers like you and has been for a long time. How has the system failed you? Lenders don’t use your credit score! Put simply, credit scores are not helpful to check if we can borrow and provide zero clarity about how to improve our situation.

The good news is that Credibble has created the Lender Score; a score designed to reflect how lending truly works. We believe that borrowers (that’s you!) should be able to see how lenders view them, so everyone can make the best decisions about their finances.

This introduces creditworthiness; what lenders really want. This is just a measure of whether you’re a good potential borrower. If you’re creditworthy, you’re someone lenders can trust to pay them back. They like to see that you’re financially stable and have a track record of managing credit responsibly. The more creditworthy lenders consider you to be, the more likely you are to access lower rates of interest on things like credit cards, loans and mortgages.

After years of research, we now know the exact criteria different lenders use to assess your creditworthiness. We source your credit file from Equifax, run it through our technology to measure it against lenders’ scoring criteria, and form a useful number out of 1000. This is your Lender Score.

Alongside this, we provide a Lender Report that breaks down the factors into the six sections that make up your score.  We can tell you how you’ve performed in each one and provide helpful personalised insights on where you can improve and how to do so.

So, what are the six Lender Factors?

  • Credit cards: Reflects how a lender views your overall use and management of this credit.
  • Affordability: Affordability indicators allow a lender to see if you are financially overstretched and your capability to take on any new credit.
  • Payment history: Displays a track record of your repayments towards existing credit.
  • Credit activity: A snapshot of the different forms of credit you’ve used in the past six years, as well as recent applications.
  • Bad credit: A view of your problems repaying debt. These have a damaging effect on your creditworthiness.
  • Stability: Your overall home and employment circumstances.

For the finer details, each factor offers a Lender Rating for four key elements. You can find out more about what’s involved in each section by clicking on the respective factor above.

Your personalised and actionable insights are shown in the form of your Score Booster. This is where you can see what is helpful and harmful to your creditworthiness and how much of an impact individual actions will have. By improving your credit status with lenders, you can unlock cheaper rates of borrowing and reduce your chances of being rejected for credit.

Find out where you stand with your free Lender Score

About the author
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Claire Ben Chorin

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