WHAT MAKES A GOOD SCORE?
Equifax offers advice as Egg closes 160,000 credit card accounts
London 4th February 2008 – The news that Egg is closing 160,000 credit card accounts because the customers do not have good credit ratings has prompted many consumers to ask the question – ‘What is a good credit rating?’ The consumers affected have also been left wondering if the cancellation of their Egg credit card will affect their future ability to get credit.
Leading credit information provider, Equifax, offers advice on what makes up an individual’s credit score. And the first point it is making is that if an individual has kept payments on their Egg card up to date, then its cancellation should have no impact on their credit rating. If, however, they have let payments fall into arrears then these would have already shown on their credit file for other lenders to see in the future.
As Neil Munroe, External Affairs Director, Equifax explains, the decision by Egg is indicative of a general tightening of credit granting across the UK. “Since the credit crunch last summer, we have seen a number of lenders tightening their credit granting criteria with the result that some consumers have not been able to get the credit deals they wanted. This goes to reinforce the fact that credit is not a right – and that consumers need to understand what lenders are looking for when granting credit and operating credit card accounts.
“Knowing that a consumer will be able repay the credit extended is obviously the number one criteria. But I think consumers also need to recognise that lenders need to be able to make money as commercial organisations and, therefore, they will also look at customers from a profitability perspective.
“But what Egg’s decision does indicate more than anything is that consumers need to be as well informed as possible about how they look to a lender. Many consumers see the credit process as a complete mystery - something over which they have no control. But that doesn’t have to be the case.”
Lenders make checks with credit reference agencies to see whether an applicant has kept up to date on repaying their credit. Lenders also use a "credit scoring" system to decide whether or not to lend to consumers – and in some instances – at what price, as well as for on-going account management. But basically, the better an individual’s credit score, the better the rate they will get, helping them take advantage of the best deals.
The Equifax credit score works by giving an individual points, based on how they compare with people who pay their credit on time. The more favourably someone compares to the national average, the better their score. Consumers will also be told how likely it is that they will be able to get a loan based on their score. And a 'traffic light' signal helps consumers identify information that might be damaging their score.
The Equifax Credit Rating™ dispels the mystery of credit scores, which Equifax research has revealed remains one of the key concerns for consumers. What makes the Equifax Credit Rating™ so powerful is that it is based on all the credit information used by lenders when assessing applications, and it is available online instantly, providing consumers with a valuable insight into their credit rating.
To obtain your Equifax Credit Rating instantly online go to www.equifax.co.uk. The price is £14.95.
THE EQUIFAX CREDIT SCORE TEST
To help consumers work out how they might score when next applying for credit, Equifax has developed the Credit Score Test.
Quiz Questions
| Questions | Yes |
No |
N/A |
Are you registered to vote at your present address? |
10 |
0 |
|
Do you have at least two active credit accounts? Such as a credit card, store card or loan. |
10 |
0 |
|
Are all your credit account payments up to date? |
15 |
0 |
0 |
Have you missed payments on your credit accounts in the last 2 years? |
0 |
10 |
0 |
Do you have any Count Court Judgments or been declared bankrupt? |
0 |
25 |
|
Have you ever defaulted on a credit agreement? |
0 |
25 |
|
Have you applied for more than two items of credit in the last six months? |
0 |
5 |
| Scorecard | |
Excellent - Your score shows that you would be a strong candidate for credit |
90-100 |
Good - Your score shows that you have a good chance of being granted credit |
70-89 |
Fair - Your score shows you may have some problems obtaining credit |
50-69 |
Poor - Your score shows you may have considerable difficulties in obtaining credit |
0-49 |
|
TOP TIPS TO IMPROVE YOUR CREDIT SCORE
|
ENDS
For further press information please contact: Elinor Puzey, Louise Fowler or Wendy Harrison at HSL on 020 8977 9132 / Fax: 020 8977 5200 or Email: elinor@harrisonsadler.com
About Equifax
Equifax empowers businesses and consumers with information they can trust. A global leader in information solutions, we leverage one of the largest sources of consumer and commercial data, along with advanced analytics and proprietary technology, to create customized insights that enrich both the performance of businesses and the lives of consumers.
Customers have trusted Equifax for over 100 years to deliver innovative solutions with the highest integrity and reliability. Businesses – large and small – rely on us for consumer and business credit intelligence, portfolio management, fraud detection, decisioning technology, marketing tools, and much more. We empower individual consumers to manage their personal credit information, protect their identity, and maximize their financial well-being.
Headquartered in Atlanta, Georgia, Equifax Inc. employs approximately 6,900 people in 14 countries through North America, Latin America and Europe. Equifax is a member of Standard & Poor’s (S&P) 500® Index. Our common stock is traded on the New York Stock Exchange under the symbol EFX.
Equifax. Information That Empowers.
