Credit checks are an inevitable part of adult life. When the time comes to take out a loan, start renting a property, or enter into any other kind of agreement that is dependent upon you keeping up with payments to your creditors, you will need to first pass a credit check. This check takes into account a number of different factors and is designed to provide potential lenders with concrete information they can use to decide whether to lend to you or not.

However, the effects of a bad credit score can extend beyond not being able to take out loans. A denied rental application, for example, can mean putting your entire life on hold, or at least having to slam the breaks on your plans for the near future.

The Power of the Credit Score

In the UK, credit reference agencies gather information about adults from a variety of different sources. The exact data used will vary from one credit reference agency to the next, and your credit score is derived from the data contained in all of those individual reports.

While the precise data in a report depends on the reference agency who produced it, they all collect their data from the same principle sources. First, there is publically available data, such as that held by courts, the electoral roll, and other public institutions. Next is data from elsewhere in the industry, including other lender and fraud agencies.

Finally, there is derived information. This is information that can be deduced from other available data, such as financial connections you have to people who have joint accounts with you.

Can I Still Get a Loan?

A poor credit score can make it harder to secure a loan in many cases, although it won’t shut you out of the system altogether. As BingoLoans noted on their FAQ page, just because you have had difficulties paying in the past, that doesn’t mean you are in the same circumstances now. It’s possible that you now have a much better job and general stability in your life.

There will still be ways for you to obtain loans and secure funding when you need it, but a low credit score will inevitably narrow down your available options, sometimes significantly.

Do You Know Your Score?

Around 47% of the UK population has never checked their own credit score, according to Experian. Of those, only half know their credit score due to someone else checking.

If everything in your life is running smoothly and you have no debts, you might not feel the need to check your score. However, it is a good idea for everyone to check their credit score. For most of us, there will be something that can be done in order to improve our score.

Bad credit can follow you around and cause serious difficulties. With debt, the desire to avoid it is understandable, but it is important to stay on top of it and not run away. Checking your credit score is a great first step towards regaining your financial independence.