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How do credit reports and ratings affect loan applications

Your Credit Rating is a very important element of the overall credit policy in the UK. A low credit rating in the UK is almost certain to negatively affect the loan applications for crisis loans thus leading to credit refusal. As prepared by credit agencies, credit rating is an extremely influential determinant and thus demands to be extensively researched upon.

About low credit rating

Low credit rating or poor or impaired credit rating is a simple to understand concept, with quite severe implications attached. The low credit rating relates to the history of not very agreeable transactions, thus corresponding to expensive loan terms, in times to come. This low credit rating is typically prepared by credit agencies, based upon information collated from various notable sources like the County Court Judgments. The credit sheet as prepared, if relates to a low credit score and thus low credit rating is certain to directly impact the loan terms thus leading to credit refusal and indirectly bear implications on aspects like insurance, housing, employment, etc.

About credit scores

An aspect closely related to low credit rating and thus the credit refusal process is referred to as credit scores. The credit score is a numerical presentation to highlight the individual’s credit worthiness. Calculated from the credit files, credit scores again are dependent upon the information fed by recognized credit bureaus in UK.

Credit scoring, for obvious reasons, is conferred due attention in UK. It is for the conceptualization of this concept that learned associates from respective backgrounds, come together at the bi-annual conference and decide upon the terms to be followed. The comprehensive approach, as bestowed to this process, is enough an innuendo towards pertinence of low credit rating.

Techniques deployed

Credit scores in UK are calculated by undertaking logistic regression analysis. A binary outcome is given by this statistical technique, which could attach low credit rating to a UK national’s credit file. Few banks in addition to the stated technique have their own customized models to predict the possibility of low credit rating and thus decide upon the credit refusal aspect.


Level of risk to repay is generated by the credit score. A low credit score is equivalent to low credit rating. The credit score signifies the probability of the assessed individual to repay the debts sought and thus serves as a substantial base for working out the loan terms.

The outlined is grave enough to highlight the importance of the statistical technique referred to as credit score, in context of low credit rating and associated credit refusal.

What is to be done?

Low credit score or a low credit rating could be avoided by effectively managing the overall credit terms with lenders. Professional consultancies in the UK could also be considered for assistance in this regard. An important aspect relates to the credit agencies that are responsible for the calculations. Therefore, while trying to improvise on the credit score, ensure to forward all relevant positive information heads like classification as a discharged bankrupt, to avoid low credit reporting and thus credit refusal.

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