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When you make an application for credit, it is not a simple case of the creditor approving or declining you arbitrarily - it all comes down to your credit scoring.
Your credit score is a financial footprint of the risk you pose - that is to say, whether a loan company should give you a personal loan or shouldn't, entirely decided by whether you are evaluated as an acceptable or unacceptable credit risk. Your credit record - which is kept by all the principal credit reference agencies, such as Experian and Equifax - outlines any type of credit you have had in the past (going back 6 years), plus existing responsibilities.
When you apply for a personal loan, the loan company will carry out a credit search - and will allocate you a credit rating determined from the data in your file. When you have many debts - and notably if you have lapsed on payments or made them late - you will receive a low credit rating.
The lower your credit rating, the fewer the possibilities for being granted credit since a small credit rating is seen as a higher risk of you not paying your debt back on time.
It also shows whether you are on the electoral roll and any financial associations. If you are absent from the electoral roll, it can have an impact on your prospects of qualifying for credit, as your home address is not 'verified'. A financial association is anyone with whom you have been financially associated, now or in the past. This could be an ex-partner, your mum or dad, or even someone who lived at your home address prior to you being there and who is still not eliminated from your credit record.
In the event the individual or people included as a financial association are not associated to you - i.e. you don't have any common financial obligations and the person is not living in the same place as you - then you may request that the credit reference agency have the details removed.
Continuing to have them on your credit record - in particular if they have a record of financial problems in the past - can have a damaging impact on you receiving any credit.
When determining whether to approve a personal loan, loan companies will also look to see what sum of money you are paying on other existing debts - if you have a lot, they might refuse you a personal loan, even when your credit rating is adequate. This is as they might consider you to be financially overburdened with an additional debt to deal with.
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