When it comes to good or bad credit statuses some people often find themselves confused as to what a particular Bank, Lender or financial institution is referring to, with this in mind we thought it was about time to spell out some tips for those with bad credit to improve their score and for those with good credit to maintain their score.

First of all, UK credit scores are assigned to an individual name and addresses, for those who have moved address in the past 3 years, you may need to supply your old addresses so that the companies in question can run a credit reference against your name and current and/or previous addresses (see more info here on the Everyday Loans Blog).

Soft and Hard Credit Checks: Once the credit check company assimilate this name and address information to you (aka a ‘soft credit check’) that particular name and address will have (potentially) a good or bad credit score and form the initial part of a lenders decision… Some UK citizens may have no credit score at all and as such this is often seen by many lenders or loan companies as a bad credit score. For example; if you have never borrowed anything from a bank or lender even a credit card company in the past, maybe you don’t have any bills or house payments, or you rent from a private landlord – these people may have no credit score yet as they have never been involved in lending, credit or borrowing before. Normally this could be young person who has lived at mum and dads house throughout their youth.

Credit Scales and References: There are a number of match fixing ‘scales’ which the credit checking companies use to produce a hard credit check – where a number from 1-5 is usually the case given; for example; 1 being really bad credit and 5 being really good credit. Depending on your wages, previous loans and investments, savings as well as dependencies and home ownership are accrued by the credit scoring systems before a credit reference is required.

For those defined with Good Credit; providing you pass both levels of a credit reference check and you are awarded a good or great credit score, then you shouldn’t struggle to find loans or lenders for various personal and unsecured borrowing. Armed with your good credit score, many high street lenders and even banks will be open to lending you money. You should hunt around for the best interest rate and loan amount and choose your provider from a selection, beware though should you continue to submit to different lenders and bank, your credit score may be affected by the amount of loans you apply for in a short time. Being wary of this is key as you could bring down your score over time simply by applying for loans and loan amount you cannot afford.

For those defined as Bad Credit; people who come out of a credit check with a poor or low credit score may find it a little more difficult to borrow money. You can turn to specialist lenders here in the UK who cater for bad credit candidates as well as trying to bring around the factors which are nullifying your credit rating. There are some great tips from bad credit lenders Everyday-Loans on their blog pages.

Providing you passed your ‘soft’ credit check and ‘hard’ credit check and the information you provided married up to what you submitted you will most likely find a UK lender who will help you out with a loan. Depending on the reasons you want to borrow money and the amount you want to borrow as well as your current credit score will affect the overall decisions of the company in question. By opting for direct lenders over brokers here in the UK you are more likely to get a better/ tailored financial product for your needs. Communicate in depth with your lenders and be honest with the information your submit or ultimately you may never receive the final approval should there be discrepancies in the information you supply furthermore make yourself aware of the legal and binding information before you sign for your loan or your home and possessions may be at risk should you fail to keep up repayments.