Understanding credit assessments: Insights from an expert

To demystify the process, we spoke with Jens Olesen, Head of Credit & Growth at Anyfin, to get his expert insights.

What are credit reports, and why do they matter?

A credit report is a comprehensive summary of your financial situation. Lenders use these reports when you apply for loans or credit cards to evaluate your likelihood of repaying the debt. Essentially, your credit report helps lenders determine your creditworthiness. A higher credit score often leads to lower interest rates, as lenders see you as a lower-risk borrower.

Who is UC, and what does their report include?

UC (Upplysningscentralen) is Sweden's largest credit reporting agency. They compile data from various sources, including the Swedish Tax Agency and financial institutions like banks. UC reports include information on loans, credits, debts with the Enforcement Authority, and any payment defaults. They also contain personal information such as your income, address, and marital status.

Does a credit check impact your creditworthiness?

Yes, it can. Each time a lender performs a credit check via UC, it is recorded on your credit history. Multiple credit checks within a short period may indicate financial instability and can negatively affect your credit score. Therefore, it's important to be mindful of how often your credit is being checked.

How does Anyfin incorporate UC scores in its assessments?

While UC scores are important, they’re far from the only thing we look at. We also consider the information you provide during your application, such as the loan you want to refinance, your income, and your type of employment. Additionally, if you already have a loan with us, your repayment history is taken into account. This holistic approach allows us to evaluate your entire financial situation to determine if we can offer you better loan terms. A good UC score does not guarantee approval, and conversely, a lower score doesn't necessarily mean rejection if your overall financial situation is strong.

Should you be concerned about credit checks?

Not necessarily. People often think credit checks are bad for them, but they actually benefit both borrowers and lenders – by reducing the risk of over-indebtedness, ensuring that credit is extended only to those who can repay it, and helping lenders make informed decisions.

However, an excessive number of credit checks in a short period can harm your credit score as it may signal a high need for credit. So it’s rather the number of credit checks, their purpose, and their timing you should focus on, than the check itself.

Should you be wary of companies offering loans without a UC credit check?

Absolutely. Companies that do not perform credit checks with UC often take on higher risks, which can result in higher interest rates for you. It's crucial to be cautious with such lenders as they may offer unfavorable terms.

Why should you keep track of your credit score?

Regularly monitoring your credit score helps you understand how lenders perceive your financial situation and allows you to take steps to improve your score if needed. It also helps you identify and correct errors or detect fraud early. Checking your credit score through the Anyfin app does not involve a credit inquiry – you just get to see how lenders view you.