Credit scoring is how banks, credit card companies and other lenders make decisions on whether or not to lend people money. A good credit score can get you better rates when you apply for a loan or mortgage, so you should treat your rating with care. It uses statistical analysis to decide whether an application falls into a low or high risk category, so is fair and unbiased.
Basically, every time you apply for a loan, credit card, store card or mobile phone contract, lenders predict your likely behaviour. Lenders then use this to determine whether they're going to lend to you and on what terms. Different lenders do it in different ways, so if one lender refuses you it doesn't mean everyone will.
The information used comes from several sources. Lenders use public records such as the electoral register to check your identity and address, court records to check for any judgements or bankruptcy, and information from other lenders such as details of other applications or whether you've made repayments on time. Even if your record shows that you have — or once had — financial difficulties, not all lenders will automatically turn your application down.
Credit scoring is different in the Channel Islands and the Isle of Man to the UK, so to find out more click on the relevant links below based on where you live. These are documents issued by the States or Government in each of the Islands.