Get to grips with the ins and outs of credit. Handy information to help you better understand borrowing.
Starting with the basics
There’s more than one type of credit and understanding the different options available can help you decide what’s right for you.
Helping you understand credit – what is a credit score?
If you’re applying for a credit card, personal loan or mortgage, lenders will usually check your credit file to:
assess your circumstances
highlight potential risks
decide on the interest rates and credit limit they’re prepared to offer.
So, if you have a good payment history on all your accounts and low outstanding debts, you may have a higher credit score … which means you’re more likely to be seen as a lower credit risk.
Usually, a higher credit score gives you a stronger chance of being approved for credit, with a higher credit limit and at a better interest rate.
To work out the risk of lending to you, a lender usually checks a number of things, such as:
details on your application form
how you’ve managed your accounts in the past
and information from credit reference agencies.
This is then taken into account as part of their ‘credit worthiness’ assessment. Then they’ll decide whether to lend to you, and on what terms.
Credit reference agencies usually hold information on people’s identity, address and personal financial history. They get some of their information from public records and other lenders.
Some ways you might be able to improve your credit score are:
make sure you’re on the electoral register
check that all your details are correct
manage your accounts effectively
pay bills and credit on time
don’t go over your credit limit
avoid applying for lots of credit in a short space of time.
Many lenders offer eligibility checkers. Ours is called Clever Check and it’s available online or on the MBNA Mobile App.
It can help you find out which credit cards you might be eligible for before you apply – without affecting your credit score – and there’s no obligation to apply for a credit card afterwards.
You can check your TransUnion credit score for free on the MBNA app, view your full credit report, and get regular hints and tips on how you could improve or maintain your score.
MBNA – choices made simple.
What it costs to borrow
Lenders will usually charge interest as a percentage of the amount you borrow. There may also be extra fees and charges. Always read all the terms of a prospective agreement to understand the costs involved.
Before you apply
It’s important to work out what you can afford. Can you make the monthly repayments, as well as any additional charges and fees?
There are different ways of borrowing. Here are a few examples:
What do lenders looks for?
When you apply for credit, lenders have to assess how reliable you are with borrowing. They may use a credit reference agency or conduct their own checks.
Know where you stand with MBNA
Sign up for ‘Your Credit Score’. We’ve partnered with TransUnion to provide you with access to your credit score. It’s free to use and won’t impact your credit file.
- View your updated credit score every 7 days.
- See what you’re doing well.
- Understand what you can do that might help to improve your score.
- Find out how your score compares to the UK average.