Does Having A Loan Means Poor Credit Rating
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When you make an application for any type of personal loan, it's not simply a question of the creditor saying 'yes' or 'no' on the spur of the moment - it is all a question of your credit rating.
Your credit rating is a financial footprint of the credit risk you pose - i.e. whether a loan provider should offer you a personal loan or not, solely determined by whether you are seen as a high or low risk. Your credit report - which is kept by all the leading credit reference agencies, for instance, Experian and Equifax - indicates what credit you have had in your history (extending back for the last 6 years), plus present responsibilities.
When you apply for any kind of credit, the lender will perform a credit search - and will allocate you a credit score based on the information found in your record. Should you have many debts - and notably if you have lapsed on repayments or have been overdue with them - you will get a poor credit rating.
The smaller your credit rating, the less chance you have of being granted credit since a small credit rating suggests there is a high risk of you not covering your debt when it is due.
It also confirms whether you are on the electoral roll as well as any financial associations. If you are not on the electoral roll, it can be detrimental for your prospects of being given credit, as your place of residence is not 'proven'. A financial association is anybody with whom you have been financially connected, at the present time or in the past. This could be a previous partner, your mum or dad, or maybe even someone who lived at your place of residence previously and has not been erased from your credit record.
In the event the person or people included as a financial association are not in any way associated with you - i.e. you have no ongoing connected financial commitments and they are sharing a home with you - then you may request that the credit recording agency correct the information.
Keeping them on your credit record - especially if they have gone through financial problems at some time - can have a harmful impact on you receiving any credit.
When deciding on whether to approve a personal loan, loan providers will also consider what amount of money you are paying out on additional debts - if you have a lot, they might well be unwilling to give you a personal loan, even if your credit rating is okay. This is since they may think that you will be financially overburdened with yet another debt to deal with.
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