Credit scoring

What is credit scoring?

Credit scoring is the system used by most of the big banks, credit card and other finance companies when they’re looking at applications for credit.

How does it work?

Credit scoring takes account of the information you give us when you apply, along with any other details that we might have – for instance, if you already have a Barclaycard – and any other information other organisations such as credit reference or fraud prevention agencies can give us.

The credit scoring system gives points to each piece of information. We add these up and when your score reaches a certain level, we generally approve your application. On the other hand, if your score doesn’t reach that level, we may not be able to offer you a card.

How do you decide what the points are?

In the 40 years that we’ve been offering credit cards, we’ve built up a lot of experience. We use it to spot certain characteristics that can predict how likely someone is to be able to make their payments. For instance, if the figures show that someone with a certain career is more likely to pay us back than someone in a different job, then the points system will reflect this.

Over the years we’ve found that this produces consistent decisions and makes sure that everyone is treated fairly.

What else do you use to decide?

We have one or two other policy rules that help us decide what we can offer. For example, two 20 year-olds may seem the same, but if one is a student and the other has been in full-time work for two years, then they’ll have a different score.

Every time we give someone a credit card, there’s a certain amount of risk to us, no matter how responsible or reliable they are. We use credit scoring to work out the level of risk involved and how much credit we can offer.

Each lender has their own policies and has different scoring systems that work for them, so we might say yes while someone else says no.

The main reason we use credit scoring is that it doesn’t single out any specific reason for a decision. It’s as fair and unbiased as we can make it, and we regularly test it to make sure it stays that way.

What happens if I’m turned down?

If we decide not to lend to you, we will give you the main reason why. For example, you may not have passed our credit scoring, or there could be other information about you which has influenced our decision.

What we won’t do is tell the credit reference agencies why we said no.

However, everyone’s circumstances can change – if you wait six months or so, you’re welcome to try again.

How to improve your credit file information

We all like to be accepted, especially for something as useful as a credit card. So how do you improve your chances of getting a yes?

Keep up-to-date with your existing credit

Paying your current credit or loan repayments on time is a good idea anyway, but it also helps to show that you’re likely to keep doing it in the future.

Be patient, not persistent

If you’re turned down, wait a few months before trying again. If you simply keep re-applying, it could lower your credit score which will actually make it even harder to be accepted.

Get yourself on the electoral register

It’s the first thing that any institution checks – that you’re registered at the address on your application.

Don’t leave out previous addresses

If you’ve moved a lot in the last three years, don’t be tempted to leave out previous addresses you’ve lived at – you might think it’s simpler, but it could look like you’re trying to hide unpaid bills from before.

Be honest about your credit history

If you’ve had problems in the past and you’ve been unable to make your repayments, or you’ve had County Court Judgments (CCJs) against you, it’s better to admit it.

Settle bad debt

Although unpaid credit and CCJs remain on your credit file for six years, once you’ve paid them off they’ll be marked as settled. This could be taken into account in your favour in the future.

Get the facts

If you’re still puzzled about why you’ve been turned down, contact a credit reference agency to see a copy of your credit file. This will show you all the information that lenders can see about you. The main credit reference agencies are Experian, Equifax and Callcredit.

Get mistakes put right

If you see something that isn’t right, dispute it – you can appeal to the agency directly, and to the lender. You can also add a note to your file, to explain any special circumstances such as a sudden illness which had an effect on how you paid your bills, for example.