Why your credit report is more important than your score.

If you’re afraid you won’t be able to get car finance, think again. American consumer finance website Nerdwallet puts it best when they say:

“If you worry that your credit score could keep you from buying a car, you underestimate how much car dealers want to sell you one.”

This is maybe putting it a bit strong. But it’s not entirely wrong, either. Lenders are not by default keen on rejecting you. What they want is safety.

This is why no serious lender will ever only look at your credit score. In fact, it is very unlikely they will use the credit score that you see – ever. Instead, they will give different weightings to the data and they will most likely also have access to more detailed accounts.

This is why the credit history/report is far more relevant to them.

The credit history (also called the credit report) is a detailed account of the data used to calculate the credit score. It is simply a more or less long list of entries detailing, as Money.co.uk sum things up,

“whether you pay your bills on time, how much debt you have, how many times you’ve applied for credit, whether you’ve missed any payments, and if you’ve had any county court judgments (CCJs) filed against you.”

It furthermore includes “your current and previous addresses, any other applications you have made, any time a company has checked your credit record in the last two years [and] financial links with anyone you share an account with, e.g. joint mortgage.”

If you add the credit report, that number suddenly becomes a whole lot more meaningful. Lenders can now see why your rating is high or low. It also helps them to understand why you may have a bad rating, although your income is excellent.

That said, if the report can tell you all of this – why bother with the score at all?

What are lenders really looking at?

Here’s a overview of the things that lenders are truly interested in:

• Your current income,
• The ratio of your spendings to your income,
• The ratio of your credit limit to how much of it you’re using. (this is called the credit utilisation ratio),
• Your savings,
• How much debt you currently have,
• How well you’re paying back your debt.

Some of these things will indirectly be part of the credit score. Most, however, will not. That’s why even lenders who do use the score to give them some pointers, never rely on it completely.