Money for Life work in partnership with the Money Advice Service, an independent organisation set up by government. Money AdviceService provides free, unbiased money guidance across the UK to help people make the most of their money. If you have a question or need help, you can chat to them here.
Your credit score is basically a number given to you to determine how reliable you are with money. This number can be generated by three different credit agencies: Equifax, Experian, and Callcredit, and each agency uses a different scoring system, so will generate a different number for you. You don’t have one universal credit score.
Still with us?
No. It’s a myth that your credit score only matters when you take out a mortgage or other large loan. Your credit score can affect you in a number of ways, including:
So, if you’re looking to agree set repayments with a company, like when paying your phone contract, buying a car on a finance deal, or taking out a loan, you need to have a decent credit score. The companies will check with one of the above three companies and if your credit score is bad, they are well within their rights to decline you.
Even if you don’t have to worry about your credit score yet, your actions now will still affect future applications requiring a good credit score, like buying a house.
Essentially, don’t forget about looking after your credit score like you did with your Tamagotchi. We know you left your Tamagotchi to starve. We know.
You have a legal right to view your credit report for a fee of £2 using any of the three credit agencies. To be thorough, it’s best to check them all but if you’re looking to take out a loan, for example, and know the credit agency the bank or company uses then it makes sense to at least check that one.
You can view your credit report for free using Callcredit’s free Noddle service, or you can sign up to Experian or Equifax’s 30-day free trials. You just have to remember to cancel before the 30-day period is up so you don’t get charged.
If your credit score is bad, don’t panic. It doesn’t automatically make you a bad person or a prime candidate for application decline.
Of course, there could be obvious reasons why your credit score is bad. If you’ve missed repayments on a loan or can’t keep up with your bills, then your score will be low. You might find our articles on how to get help with your debts and how to manage your money helpful.
To have a good credit score, you need to be able to prove that you can meet repayments on time. If you don’t use credit cards or have never used a loan, it means companies don’t know how trustworthy you are with money, so any application for a future loan might be rejected on that basis.
If your credit rating could do with improving, try these tips:
Bear in mind, you can’t change your credit score immediately. Building it up will take time, but it’s worth it for the sake of applying for loans etc. in the future.
OK, there you have it. A quick guide to your credit rating and why it matters. You can go and do something super fun now.
If you want to know more about your credit rating, you check out these articles from MoneySavingExpert.com and the Money Advice Service.
You can also take part in our online training, giving you more information on credit scores.
Money for Life work in partnership with the Money Advice Service, an independent organisation set up by government. Money AdviceService provides free, unbiased money guidance across the UK to help people make the most of their money. If you have a question or need help, you can chat to them here.
