We will often hear that credit scores are important and that we need to try to have a good one. However, it can be difficult to achieve this and you may worry that you will not be able to secure a loan if you feel that your credit score is not good enough. However, you may find that credit scoring may not be quite as important as you think.
The traditional lenders will always do a credit check. They will be looking to see whether they can trust you to repay the loan on time and in full. Therefore, they will look at whether you have repaid loans in full in the past or had any missed payments and they will also look at payments that you make now. They will like to see that you are making regular payments on time, whether that is for a loan or something else. This will only be the first stage of what they are likely to be looking for though. They will also be thinking about whether you can afford to make the payments that they require. For example, they will be looking at what your salary is and whether you have a lot of other loans that you are also repaying. They will want to make sure that you have the capacity to be able to afford the loan that you are hoping to take on. They will also be looking at whether you have applied for lots of loans recently. They will worry that if you are applying for a lot, that it looks like you are not managing money well and therefore they could worry that this is a sign that you will not be able to make the repayments on their loan. So, there are a lot of things that they are looking for.
However, you may find that some mainstream lenders will also be a bit more open minded and will not be looking for a completely perfect credit record. Some might be happy to take on borrowers that they feel will be a greater risk, but they will charge them more interest, so that they can cover the costs of any missed payments. There are also some lenders that like to take on people who miss a few payments because they feel that they can make more money out of them as they will be able to charge them more money if they miss repayments. This means that you do not always need a completely perfect credit record. As no lender will actually reveal exactly what they are looking for when they do a credit check, until you apply, it can be hard to know whether they will take you on.
There are some lenders that will not worry about what your credit record is like. Legally, they have to do a credit check, but they will need to look at some of your details on your credit record in order to complete the identity checks. This means that even if you have a poor credit record, you will have the opportunity to borrow money. You could pick a payday loan, where you will be able to borrow up to £1,000 for a small period of time or a guarantor loan where you can borrow thousands of pounds as long as you find someone willing to make the repayments if you miss them. These are limited options, but they can be useful if you do have credit report that is not good enough to get any other sort of loan and you desperately need some more money.