What Is A Good Credit Score ?
We know it’s used by lenders but the majority of people do not fully understand what it means or how it is used.
Technically, there is no such thing as a good credit score, not in the sense most of you will probably think anyway. There is no universal scoring system in the UK, which means that knowing if you have a high score or a low score may not always correspond to whether you can get credit.
But don’t be discouraged, it is useful to know your score so that you can get down to the more important bit…improving it. Like a tiny credit roundabout, good things could lead off of it, but you have to get on it first.
It’s important to remember that lenders will not lend based upon one Credit Score figure, but from your Credit Report.
Think of this as your very own personal financial supermarket. It’s basically where anyone with your permission can come and check you out. Your Credit Score is what credit reference agencies create using your Credit Report, so your score can give you some indication to what lenders might think about you if you’re looking to borrow money.
Just bear in mind, you know you and you think you’re pretty awesome, but lenders don’t know you apart from what they see on your report and even the highest scorers can have trouble borrowing, so don’t be misled.
Unfortunately a great score with one credit reference agency may only be above average with another.
Like the confusion of modern dating, each lender has an unpublished list of ideal qualities it looks for in its candidates. There are ways in which we can look our best to potential lenders which might boost our chances, unfortunately a spritz of aftershave or a flick of mascara won’t help you here, but things like being on the electoral roll, responsible borrowing and spending and keeping an eye on your credit report for any mishaps are all key to making you look good.
Top Tip: with lenders all looking for slightly different things, sometimes you can think you tick all the boxes but you might just not be what they are looking for, and honestly, that’s ok. You can’t be everyones type.
Does a high score guarantee I’ll pass with lenders?
Knowing you have a high credit score will mean lenders can also see that your credit report is great. It could mean you can borrow the amount you want or need and at a lower interest rate.
A lower score could mean you get a lower amount than you wanted and most probably at a higher interest rate than you were looking for or, it might mean you’re turned down completely.
But don’t be fooled into thinking lenders will always give money to those with a high score and not to those with a low score. Although they most probably won’t lend to you if you won’t be able to repay at all, someone paying their full balance each month might not be up their street either.
They need to make money and if you’re only predicted to be making the minimum payment each month, you are more profitable to them.
Credit Scores are more talked about and taken into account now than ever before, so it is important to know your Credit Score whether it be high or low – sorry we can’t give you an exact figure to aim for.
Just make sure you know what your score is with each of the 3 main reference agencies to get a better idea of where you stand and keep an eye on your Credit Report incase of any discrepancies.
Why do we have a credit score?
We have a credit score simply so we are able to get a better understanding of our Credit Report. We can use this as an indication of whether the steps we are making to change it are working or not.
Does your Credit Score matter?
Lenders will only see your Credit Report, this is what they will make decisions based upon. By having a credit score YOU can see, you might be able to determine what sort of credit you can be eligible for. Being able to understand your own credit score can help you understand whether your credit report is improving or not.
What’s the difference between your score and your report?
Report: Your Credit Report is what lenders will use to decide whether they trust you enough to lend you money.
Score: Your Credit Score is an indicative number that tells you how your Credit Report compares to the things lenders will usually look for before making their decision. This is for yourself more than anything else.
The three main credit reference agencies
Also good – ClearScore