Our credit scores have become the defining factor in our financial lives, and we’re not just talking about applying for a mortgage, personal loan, or car financing – it can even control whether you own a cell phone or not.
New research has revealed that thousands of Britons across the UK are completely unaware they are being judged over overdraft extensions, paying household bills and even renting a flat.
And that extends to monthly insurance premium payments, monthly withdrawals and monthly electricity withdrawals – with more than half of the population admitting they were unaware that Big Brother checked their reliability, according to Amigo Loans.
Seriously, one in five people don’t know they’re going through a credit check when they apply for a mortgage, which means they can not only be turned down, but could also hurt to their credit rating, which makes finding a mortgage even more difficult – and more expensive. .
Top 10 Financial Transactions People Don’t Know They’re On Credit Check
Insurance monthly payments – 63%
Gas levy – 56%
Electricity charge – 56%
Apartment rental – 50%
Monthly mobile phone plan – 37%
Overdraft extension – 49%
Store Cards – 42%
Retail financing – 37%
Auto financing – 27%
Personal loan – 24%
Revealing the full list of financial transactions people didn’t know were on credit check, Amigo Loans uncovered renting an apartment or house, applying for an extension overdraft, taking out a store card and even a personal loan among the biggest shocks.
“Thousands of people are completely oblivious to the fact that major institutions verify their reliability. Long gone are the days when you were only checked for a mortgage or loan.
“What’s really concerning is that people could inadvertently destroy their own credit score and therefore close the door on life dreams like home ownership,” says Glen Crawford, CEO of ‘Amigo Loans.
Credit improvement service Credit Improver looked at the typical interest rate a borrower could get – depending on their credit rating – on a £5,000 personal loan repaid over 36 months.
A borrower with an ‘Excellent’ credit score, between 961 and 999, could get a typical rate of 3.8% APR, with monthly interest payments of £8.14 and full interest paid over the life of the loan from £293.08.
However, someone with a “very bad” score, between 0 and 560, can typically get an APR of 79.4%, with monthly interest payments of £162.96 per month and a total interest paid of 5 £866.60 over three years. That’s an additional interest of £5,573.52.
Hannah Maundrell, editor of Money.co.uk, comments: “A decent credit rating is your key to being able to borrow without paying an awful amount of interest and can make or break your chances of being approved for a deal whose you need.
“If you don’t pay attention to your credit score, you could seriously hurt your chances of being accepted. It’s not just the big deal either, getting a monthly mobile contract or splitting the cost of insurance all depend on your credit history which seems trustworthy, so you should exercise caution.
“Credit crimes can stay on your file for up to 6 years so one mistake could cost you dearly. maybe not informed the credit agency yet – they don’t always do it immediately so it’s worth a try.
“It could be a quick phone call and a quick payment saves you a credit blemish that will last for years.”
Everything you need to know about credit reports
What is a “good” and a “bad” credit score?
“Credit scores are numerical ratings on a sliding scale. The higher your rating, the less risky you are considered,” Experian experts explain.
This doesn’t mean that if you have a lower score you won’t get credit – it just means that the terms of your credit agreement might be less favorable than those with a higher score, for example you might receive a low credit limit or charged a higher interest rate.
A credit score is not immutable. It is an ever-changing entity and as your financial behavior changes, so does your credit score. If you manage your finances responsibly and don’t show an overreliance on credit, you are likely to be seen by other lenders as a safe bet for new credit.
As an example, an Experian credit score will range between 0 and 999. A very poor credit score is considered below 560, while an excellent score is above 961.
A damaged credit rating can have a serious impact on an individual’s ability to borrow from a lender, especially a mortgage. If your credit rating is poor, it indicates that you are less trustworthy when it comes to repaying a loan.
How can I calculate my credit score?
There are a series of major credit reference agencies that allow people to check their score before applying for credit, including; Equifax, Experian, Callcredit, ClearScore, Credit Angel and Noddle.
These credit reference agencies store data on the financial activities of millions of Britons. They make money by commissioning companies, like banks, to search for these files when people apply for loans, credit cards, mortgages, etc.
However, they also give you the option to review your report and correct or dispute any inaccuracies, such as a change of address, which can save you a fortune in additional costs later.
How to increase your credit score
How to improve your credit score
It’s more vital than ever that you check your credit report, understand what’s affecting your credit score, and clean it up as much as possible. It’ll give you a shot at getting that mortgage, loan, or credit card – and at the best rate.
Research from CreditExpert shows that eight out of 10 of us believe failure with a lender will hurt how others rate you. Although a “fingerprint” of the lenders’ searches is recorded, the fact that they have refused you credit is not. But if you apply quickly elsewhere, too many footprints will sound the alarm that you’re in financial trouble.
Around a quarter of people believe that missing a mortgage or credit card payment won’t impact their credit score – but these are two of the biggest negative factors on a credit score.
5 steps to improve your credit score
One way to improve your score is to get a credit card and make regular payments.
You must establish a history of card use and make payments on time EVERY month. Pay off the balance each month to increase your score without paying interest.
For example, buy gasoline on it once a month and then pay the entire bill.
Make sure you are registered on the list of electors at your current address. If you’re not, it can cause delays when you apply for credit, and some companies may refuse you outright if they can’t confirm where you live.
Make sure all the information in your credit file is completely accurate and up to date. Dispute it if not.
If you have ever had credit problems and there were special circumstances such as loss of your job, family bereavement, etc., explain this on your report by adding a notice of correction to any late payment. payment for this period.
If you had financial ties to others that are no longer relevant (such as an ex-partner), request that they be removed from your records.
Close accounts you no longer use. A large number of unused credits that you can access without additional verification can negatively affect your rating. It can also make you more vulnerable to fraud.
Financial ties, such as a joint mortgage or a bank account with a partner, will show up on your credit report as an “association” with your other half, says James Jones, chief consumer officer at Experian. Being related to someone else means their credit rating could affect yours. “If you are still financially linked with a former partner but you know you no longer have a link, contact the credit reference agencies to have the associations canceled,” he adds.