Your credit score could very well stop you from getting a mortgage, a loan to start an exciting venture or even a phone contract – but new research shows that two-thirds of Brits don’t know what their credit score is.
A poll of 2,000 adults in the UK found that more than four in 10 have never tried to find out their credit score, and it’s been longer than a year since checking for nearly 20%.
The survey found that poor money-management skills, due to poor financial education in schools, has led to two-thirds of people unable to obtain a mortgage or a loan.
One in 20 has had their applications for a mortgage rejected – and even been denied a mobile phone contract, due to their poor credit history.
The study was conducted by online lender MYJAR, whose spokesperson said: “Many people may not think they need to worry about their credit score, until suddenly a situation arises where they need to borrow money.
“It’s really valuable to know and understand your credit score because if you’re able to improve it, it can offer peace of mind knowing you have that safety net there if you need it. You can easily request a copy of your credit score online.”
Improving your credit score
Many Brits are also unaware of ways that their credit score could be improved, with over half not knowing that joining the electoral register can help.
And over four in 10 aren’t aware that paying pre-existing loans back on time can boost your credit score.
Top tips for improving your credit score
- Join the electoral register
- If you have a credit card, pay it off in full every month
- Don’t make use of all of your available credit facilities, as it indicates financial difficulty
- Don’t make a lot of credit applications in a short amount of time
- Having the same bank account for a while is a good indicator for your credit score
Building a bad credit score
One in five revealed that their poor credit score has seen them denied much-needed cash loans.
But it’s not surprising when the survey also unveiled that an incredible four in ten people use credit cards to buy anything as if it is just a debit card of ‘free money’. However, the most common use for credit cards was to buy expensive one-off items.
Credit card debt
More than half of the country doesn’t know exactly how much they owe on credit cards and loans, although estimates suggest that, on average, each Brit has £1,780 worth of credit card debt.
Not including mortgages, they also owe over £1,600 in loans, plus a further £311 on store cards and to overdrafts.
Basic money management
MYJAR’s spokesperson said: “We think that financial education has let down previous generations and resulted in a lot of people who don’t understand basic money management or any idea of how many financial products work.
“Misuse of credit facilities and a disregard for your credit score has resulted in a lot of people with unnecessary debt. That’s why we think it’s imperative to be a responsible lender and to educate our customers through our money management and saving tips blog posts at MYJAR.com.
“We urge people to take credit extremely seriously, and that no one should take on debt without proper consideration. We encourage our customers to educate themselves on things like their credit score and to save their money so that they can take steps to improve their future financial circumstances.”
Having good money management
Just one in 10 respondents have updated their creditors with their new address after moving home, and fewer than one in five have paid off their full credit card balance each month.
A tenth of unfortunate respondents have been turned down for a loan in the past, and the same amount has had no luck applying for a credit card.
Four in 10 believe their credit score was the culprit for their financial difficulties, and 15 percent put it down to having one or more CCJs against them.
And a surprising one in 20 believed it was because they had been a victim of identity theft, with the criminal leaving black marks all over their records.