How do lenders make decisions?

It can sometimes feel like the way lenders make decisions is a mystery and, to a certain degree, it is. Each lender has its own criteria for lending to someone (sometimes referred to as a score card) and the factors they consider may also change depending on what you’re applying for.

However, the good news is that there are some general things that each lender will look for and it pays to know them so you can understand the decision process and increase your chances of being approved.

To help, Noddle has broken down how lenders generally make decisions for two common lines of credit: Credit cards and loans, and mortgages.

Credit cards and loans

If you apply for a credit card or loan, lenders will generally use the following to make decisions:-

  • Your credit report – this will help them see your history of managing credit
  • Your earnings and existing credit commitments – this helps them see if you can afford to take on any more credit
  • Personal circumstances – you’ll usually be asked to fill out some basic information, such as whether you’re in full time employment and the number of dependents you have

Using this information, they will then assess your credit worthiness based on their own particular score card.


As a mortgage is such a huge financial commitment, the decision-making process often takes into account a much wider range of factors to help lenders assess credit worthiness and affordability. These include:

  • Your credit report – so lenders can see your history of managing credit and your existing credit commitments.
  • Your income and the likelihood of this remaining stable – this is one of the things lenders use to assess affordability.
  • Personal circumstances – to help lenders understand any dependencies you have and your employment status.
  • General outgoings – lenders want to know about things like average gas and electricity usage, TV and phone bills, and travel costs to calculate affordability.
  • Savings and investment contributions, including pensions – these help lenders do a ‘stress test’ as part of affordability, which is basically asking the question of ‘if something negative happened, such as losing your job, could you cope financially?’
  • Lifestyle costs – this might seem a bit personal, but lenders will often start to asks questions about how much you spend on things like the gym or Netflix to help them understand how you manage your money.
  • Mortgage terms – you’ll be asked what term you intend to take your mortgage over, e.g. 25 years. This helps them work out affordability.

What you can do to increase your chances of approval

The biggest thing you can do to increase your chances of being approved for the credit you want is to check your credit report and score.

Your credit score is an indication of your credit worthiness and the higher it is, the better. While lenders will take other things into account, as you can see above, your credit profile is an important part of the decision making process.

Make sure all the information credit reference agencies (CRAs) hold on you is correct, as incorrect information could drag your score down. It’s recommended to check your credit report and score with all three CRAs – Noddle, Experian and Equifax – as the information each holds on you might be different.

To help you get your credit report in order, check out our guide on what to look out for.