The Application Process

Lending institutions offer various options of applying for a loan, often including their branch network, over the telephone, via a written application, or online through their web site. Initial assessment of your application can be made quickly, although loans under £25,000 are regulated and a 7-10 day consideration period (also known as a cooling off period) is provided to allow time for you to assess the implications of the credit agreement and to ensure that you are fully aware of all the terms and conditions. When assessing your application, the lender or an intermediary will consider your income and financial commitments and assess the level of risk associated with you taking on an repaying the loan. Your past credit history is considered including any adverse credit such as mortgage arrears, defaults or County Court Judgments. All lenders insist that where an applicant is married, both parties should be named on the application form.

Lenders frequently use credit scoring facilities and Credit Reference Agencies to assess your suitability. Credit scoring assesses your personal circumstances and statistics to determine which broad category of borrower you fit in to. Credit reference agencies provide a detailed analysis of your financial position as they hold information known as your Credit File which details your credit history, any adverse credit and any existing commitments. They also provide address and electoral roll information. If you are refused a loan or wish to make enquiries concerning your own credit file, you can apply to the credit reference agencies for a copy of your credit file. This service is subject to a small fee.

After your application has been processed, you are provided with the decision. Since criteria and credit scoring varies between different lenders, being refused credit by one lender is not necessarily an indication that a loan application will not be accepted by other lenders. You should note however that your Credit File includes all instances of being refused credit.