When standing in a bar or walking down the street how many of you grade the talent? Scoring looks, tan, muscles and bums. We are all guilty of it and are sometimes even cruel.

Applying for finance can be just as cruel. Whether lenders are offering credit cards, loans or mortgage facilities they all adopt a similar meat market system to gauge how attractive you are as a customer.

Being rejected for a loan can be as frustrating as being knocked back by a prospective date. 'I'm sorry sir you don't meet our criteria!'
It's a closely guarded secret by all lenders of how they choose borrowers. This can make life even more frustrating.

Don't worry, help is at hand.

Even though he will face certain exclusion from the inner circle of lending big wigs, Chris Morgan is going to share all of their secrets…

Address

Contrary to belief, your postcode has little bearing on acceptance. Your address is normally noted in order to check credit history. Lenders will be looking for late payments, arrears, defaults and County Court Judgements (CCJs). Most credit checking bureaus use the Electoral Roll as their first point of reference. If you haven't registered your credit status you could be seriously affected. If you're a not a British citizen then you may need to prove your residency further before obtaining credit. This is normally done through presenting official correspondence or utility bills from your current address. Most lenders will look at your previous addresses for the last three years.

Employment Status

Valuable points are won and lost for stability and length of employment. Qualified professionals may be treated differently to manual labourers. They may even receive preferential interest rates. Temporary/contracted workers may be scored lower than those in permanent employment. If you are within a probationary period I would advise that you wait to apply until this has been completed.

The self-employed will be asked regarding the length of time in employment. Lenders will be looking for up to three year's accounts. If a lender is looking for less, they may be charging you more for their trust. 

Home Life

Lenders will look at your home circumstances closely. They sometimes will ask if you have financial dependents. Dependents can work for and against you. Maintenance costs to a previous marriage could be seen as a burden on your monthly budget.

Gay men might argue that young children should be seen as a financial drain when assessing credit. Lenders are more likely to look at this as stability and responsibility and a sign that they will get their money back and more.

Housing

Current homeowners and private tenants attract the highest scores and attract credit easier than local authority tenants. This factor is not normally taken in isolation, but you're now probably building the wider picture. Homeowners will have an existing mortgage history that can be checked. Private tenants would normally be able to provide a landlord's reference.

If you're young and living with parents, lenders are likely to be more careful. They would recognise that the applicant is unlikely to be paying the bills at the property and therefore probably has less experience of budgeting.

If you're a first time buyer applying for a mortgage you are likely to score lower, they are likely to pay special attention to your overall budget. Ensuring enough disposable income remains as a cushion. 

Income

Lenders will compare your monthly income (in your hand) against your existing debts. Those with a higher disposable income should score well. The existing liabilities that a person holds already are a crucial factor. If you are over burdened then naturally you will score poorly. If you have a good record of paying money back on time, then you will be seen as a 'good risk' and score well. People without any existing credit or loans may have difficulty, as Lenders normally rely on finding some track record.

Don't Give Up

Not one of these single issues are likely to win or lose an application, they all fit together to create the wider picture. Loans and credit cards with lower interest rates are likely carry stricter criteria. One example is the new Internet banks. They have recently been accused of cherry picking the best clients. If you have problems obtaining a loan from a low interest provider than don't give up. They are likely to be operating with less provision for unpaid debts.

The finance industry is increasingly competitive and each provider will look for different plus points. It's all in the eye of the beholder and each will have its own fancy. An application that one rejects might be attractive to another-just like grading the boyz. 

Here will be the body text for this particular article. It should be pasted or imported over this text. Here will be the body text for this particular article. It should be placed here over this text. Here will be the body text for this particular article. It should be placed here over this text.

Subscribe to the Pink Finance monthly newsletter and keep abreast of what's new on the site by clicking here. Your address will not be shared with any third party and you may unsubscribe at any time.

©2001-2002

Please note that the articles contained within this site were written for Pink Finance and are subject to copyright. They may not be reproduced in any form without prior written permission from the editor. Graphics/images/logos and site design are by John Myers and remain his copyright. Likewise, they may not be reproduced in any form without prior written consent.