Understand bad credit scores before applying for loans
There is no specific credit score in Ireland, like in other countries. Here, instead of an official credit rating or credit score, there is information on payment behaviour. This information is recorded in the Central Credit Register.
Central Bank of Ireland operates the Central Credit Register. Instead of assigning one specific credit score, this register stores the past payment records of every borrower. This includes repayment history records of loans, mortgages, overdrafts, car loans and every type of qualifying loan option.
Lenders use these details to make loan approval decisions. Therefore, even in a bad credit situation, this report is considered significant by lenders whether you apply for bad credit personal loans , car loans, or a mortgage.
You can borrow with a bad credit score.
However, having a bad credit record does not mean that you don’t have any right to apply for loans. In Ireland, for every application for a loan amount of more than euro 2,000, lenders pull the credit report from the Central Credit Register itself.
To make the approval decision, they consider not only the past record but also current creditworthiness as important.
This includes income regularity and stability, employment stability, debt-to-income ratio, income-expense ratio, identity and address proof.
What makes your credit history look poor?
In the past, every type of payment issue adversely affected the credit history. These include arrears, missed repayments, legal actions for unpaid loans, high debt-to-income ratio, high credit utilisation percentage, frequent loan applications, inaccurate or incorrect information.
All of this adversely affects the credit report. It makes your credit history look poor. Not only that, but wrong information mentioned on your credit report also leaves a negative mark. Continuously review your report before applying for a credit product.
How long does a negative statement stay on your credit report?
If you are planning to apply for a loan, then this information can be important for you. Information recorded in the Central Credit Register can remain on your report for five years.
Whether the loan is written off, discharged, or repaid fully, the information remains for a minimum of five years. If any loan has not been settled, then this period may differ.
Therefore, before applying for any loan, it’s important that you properly understand the data available in your credit report. However, a past poor payment record does not define your creditworthiness. It always depends on your current financial circumstances.
The more stable your personal finances in recent times, the higher the loan approval chances. It is the most important factor considered during the loan process by loan companies during affordability assessment.
Hence, you should pay your accounts and obligations on time. It is always best to apply for a new loan with improved financial behaviour.
Lending facts to know before you apply with a bad credit situation
As you read above, it is totally fine to apply with past payment issues, but as you may want to compare varied loan options, it is better to know about a few lending facts. Here they are.
CCR does not assign a specific bad credit score
The Central Credit Register records your payment history. But it does not assign a specific numerical expression to your debt payments.
The repayment behaviour is recorded as late, paid, delayed or default in your report. This defines your creditworthiness, and lenders can decide whether to approve or reject your loan application.
Therefore, more than your past payment records, pay attention to your current payment behaviour. That defines your creditworthiness in a true sense. As you are applying for a loan in current times, your current financial conditions are more important.
Various loan deals or companies have different lending policies.
It is not practical to expect a certain outcome from every loan option. No conclusion is guaranteed on a loan application.
There is no guarantee of approval, nor is refusal the only conclusion. The final approval decision depends only on your provable ability to make repayments.
There is no specific universal bad credit score in Ireland. It is more about your payment behaviour in past months and years.
One thing is clear: whether it is in numerical form or in the form of statistics and information, your payment issues are always visible to the lenders through your report.
Applying to multiple lenders does not improve your chances of approval.
It only leaves multiple search footprints on your credit report. When many loan companies perform hard searches on your financial records, a footprint of that is left on your financial records.
Every lender can see the hard search of another lender. Due to this, all loan companies consider that you are desperate to borrow funds. Multiple loan applications denote that you are a credit-hungry fund seeker.
This represents you as a borrower who may be surviving on credit only. Hence, never apply for multiple loan deals.
Compare, choose a lender, and apply to only one.
No borrowing decision can ever be correct without comparison. It is especially important in the case of bad-credit personal loans. The loan solutions come with a higher interest rate.
Also, check your repayment ability using a loan calculator. When you try to get approved for a loan amount beyond your creditworthiness, rejection is the most likely outcome.
We always inspire our borrowers to make an informed borrowing decision. All the lenders available on our panel offer tailored deals. We can match your loan requirement to them through one application.
Conclusion:
The information above about the poor credit situation can help you apply safely for a bad credit loan. It is really very important to understand your payment history. Know where and how it is recorded, and whether it is represented in numerical form or in the form of information.
Make sure that you fix these issues by improving your repayment behaviour. At least the last six months’ financial records come under scrutiny during the loan application processing.
Got more questions about credit scores? Let’s find the answers.
Let’s make borrowing decisions easier for you. Here are some of the frequently asked questions and their answers.
Can I get rejected for a loan despite a good credit score?
Yes, it is possible. This usually happens in the case of a high debt-to-income ratio. Financial inability to pay a new loan instalment can lead to rejection irrespective of credit score.
Does checking my own Central Credit Register report damage my credit history?
No, when you perform a check, that is called a soft check. It leaves no impact on your credit report. Other lenders cannot see or notice that because it is not recorded.
What should I do if I find an unfamiliar credit account on my credit report?
Inform the CCR and get the error rectified. Applying for a loan with a credit report that has errors can affect your approval chances.
