The risk tab provides a summary of the risk associated with a particular application.
1. Credit Score
The credit score is a key indicator of an applicant’s credit risk.
The score is derived from TransUnion. The three-digit number (ranging from 445 to 770) is a strong predictor of an individual’s likelihood of repaying a loan. A higher score suggests a lower risk, while a lower score indicates higher risk.
Factors that influence the credit score include:
Repayment history: Timely payments generally contribute to a higher score.
Outstanding balances: High balances relative to available credit can lower a score.
Legal actions: Defaults, bankruptcies, and other legal issues can significantly impact a score.
For more detail on how to interpret credit scores and common reasons for lower scores, see the [Credit Score Reasons] guide.
2. Credit score reasons
Credit score reasons explain the factors that are driving a credit score down. This helps Loan Officers better understand an important indicator of risk.
A credit score is a summary of all the good and bad points within an applicant's credit history.
3. Search History
Recent credit searches can provide insight into an applicant's financial behaviour. Multiple credit applications in a short period may signal that the applicant is seeking credit out of necessity or financial distress.
A high number of recent searches could indicate:
Potential financial instability: Frequent credit applications might suggest that the applicant is facing cash flow issues or struggling with their existing debts.
Risk of over-borrowing: Applicants applying for multiple loans may be at risk of taking on more debt than they can manage.
To get a detailed understanding of search history and how it influences risk assessment, refer to the [Search History] section.
4. Electoral Roll Status
An applicant’s registration on the electoral roll is an important factor in assessing stability and identity verification. Being registered demonstrates that the applicant is living at a fixed address, which reduces the likelihood of fraud.
While not a direct indication of creditworthiness, applicants who are not registered may require additional verification steps. Missing this detail can raise concerns over identity validation, especially if the applicant’s address is not confirmed through other means.