MoneySavingExpert.com Credit Scoring
Feature by Martin Lewis, MoneySavingExpert Dean Martin may have crooned, “You’re
nobody till somebody loves you”, but in today’s financial world, you’re nobody till somebody scores you.
The more creditworthy you are, the better deals you can get, whether it be mortgages, contract
mobile phones, bank accounts,
monthly car insurance or even how you pay for your energy bill.
So it’s time to add ‘manage my credit file’ to your to-do list - especially if you’re about to make a big application. To help, here are my 10 things you need to know about credit scoring.
1. You don’t have a universal credit rating - there’s no blacklist. Each
lender scores you differently and
secretly to see if you meet its requirements as a profitable customer. Those whose history shows they’re unlikely to repay are unlikely to be profitable, but good risks can be rejected too, if the lender thinks you won’t make it money.
2. Boosting your credit score’s like going on Tinder You can try a host of things to make yourself more attractive to lenders, but there’s no universal fix. Say two women both use dating app Tinder - one might always swipe no to men with beards, the other might love them. Equally, different lenders look for different things. Yet most people like someone who doesn’t smell, so here are some simple cosmetic changes that work for most:
•
Evidence of stability’s good. Put a landline, not mobile, on applications.
• Don’t withdraw cash on credit cards or get payday loans. They’re expensive and evidence of poor money management.
12 • • •
Never miss or be late on repayments. Use a direct debit, even if just for the minimum (then repay more on top).
Check for address errors. An old active but unused mobile registered to an old address could cause a mortgage rejection.
Time it right. Major problems like CCJs, defaults or bankruptcy stay on your file for six years. Applications for products stay on for one year. If they’ll soon lapse, consider waiting to apply.
3. Find out for free what cards and loans you’ll be accepted for. Most of the credit score boosting techniques take time to filter through. If you need credit now, instead the key is to find which provider is most likely to accept you.
My free loan and credit card eligibility calculators at
moneysavingexpert.com/ eligibility show your % odds of acceptance (and unlike applying don’t impact your credit- worthiness), so you can home in on the right card or loan, minimising applications.
They can be hugely powerful. Kelly messaged me to say: “Used the balance transfer eligibility calc and got 35mths 0%, shifted £11,500 from up to 29.9% APR” - saving £4,600 interest.
4. Get on the electoral roll. Register at
www.gov.uk. Don’t worry about getting lots of junk mail - you can opt out of the ‘open register’ element, which stops this.
5. Check your file. Even small errors on your files at the three credit reference agencies - Experian, Equifax and Callcredit - kibosh applications.
Check
them all line by line at least once a year - you’ve a legal right for £2.
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