Affordability and Creditworthiness at Cashfloat
Before any borrowing is offered in the UK, lenders are required to assess whether it is affordable and appropriate for the individual. This process is known as affordability and creditworthiness assessment.
Cashfloat follows the rules set by the Financial Conduct Authority (FCA) to ensure borrowing decisions are based on a customer’s financial circumstances and ability to repay, not just the amount requested.
What Is an Affordability Assessment?
An affordability assessment looks at whether a customer can repay borrowing without experiencing financial difficulty.
This assessment considers factors such as:
- Income and regular earnings
- Essential living costs
- Existing financial commitments
- The impact repayments would have on day-to-day finances
The purpose is not to approve the largest possible amount, but to ensure that borrowing is sustainable.
What Is Creditworthiness?
Creditworthiness is a broader assessment that helps lenders understand how borrowing fits within a customer’s overall financial situation.
It may include:
- Information from credit reference agencies
- Previous borrowing behaviour
- Current levels of outstanding credit
Credit history is only one part of this assessment. A poor credit record does not automatically mean borrowing will be offered, and a good credit record does not guarantee approval.
Why FCA Rules Require These Checks
Under FCA regulation rules, lenders must not offer credit that is likely to be unaffordable. These requirements are designed to:
- Reduce the risk of customers entering unsustainable borrowing
- Prevent harm caused by repeat or excessive borrowing
- Ensure lending decisions are responsible and fair
How Cashfloat Assesses Affordability
Cashfloat carries out affordability and creditworthiness checks before offering any borrowing.
This process may involve:
- Reviewing income and expenditure information
- Considering existing financial commitments
- Using information from credit reference agencies
- Assessing whether repayments are realistic for the customer
The same approach applies across all types of borrowing offered by Cashfloat.
Does Checking Affordability Affect Credit Scores?
Affordability checks may involve credit searches, depending on the circumstances.
These checks are used to:
- Verify information
- Support responsible lending decisions
They are not designed to penalise customers, and the purpose is to ensure borrowing does not create financial strain.
What Happens If Borrowing Is Not Affordable?
If an affordability assessment indicates that borrowing may cause difficulty, it may not be offered.
This is intended to:
- Protect customers from financial harm
- Prevent situations where repayments cannot be maintained
If circumstances change after borrowing has been taken out, support may be available.
Why Affordability and Creditworthiness Matter
Affordability and creditworthiness checks are a key part of responsible lending in the UK. They help ensure that:
- Borrowing decisions are based on real circumstances
- Customers are not encouraged to take on unsustainable debt
- Consumer protection rules are followed consistently
Understanding how these assessments work can help borrowers make more informed decisions.
Affordability Applies to All Types of Borrowing
Affordability and creditworthiness assessments apply consistently across:
Regardless of the type of borrowing explored, the same regulatory standards apply.
Independent Guidance on Affordability
Independent information about managing money and understanding borrowing decisions is available. Consumers can access free, impartial guidance through MoneyHelper, which provides support on:
- Budgeting and managing income
- Understanding credit and borrowing
- Dealing with financial pressure