Credit Scores. Unless you’ve already applied for some sort of loan, overdraft or credit on a purchase you probably haven’t heard about them or even know what your score is.
That’s why we’ve put together this handy little guide to give you the low down on what a credit score is, how to find out your score and ways to improve it.
What’s a credit score?
A credit score is a “statistical number” that lets investors know how credit-worthy you are. Basically it’s a rating on how good you are at paying back the money you have borrowed.
Now you might think that not having any loans or debt in the past will give you a really high score but sadly this isn’t the case. Creditors like you to have a little bit of credit history whether it be a phone contract or an overdraft to show that you are capable of paying the money back.
Why is it important?
Credit scores are really important whether you want to buy things on credit or not. Having a high credit score means than you are more likely to qualify for things like mortgages and loans in the future.
If you have a low credit score you could be turned down for future investments which could include renting a flat. You may even be turned down of for something as small as a phone contract fi you don’t have any credit history.
How do I increase my score?
Many credit score companies will tell you what you can do to increase you score. A few simple things you can do include setting up an overdraft and direct debits, having a bank account for a long period of time, and even just registering to vote.
As you can guess the more credit you have and pay back or the longer you have a credit contract such as a phone bill the better your score will be.
If you check your score and notice something is wrong then you can get this amended by contacting the relevant company or the credit score providers. It is recommended that you do this as soon as possible as it could have a big impact credit history report.
Remember that your credit score can go up and down. If you purchase a lot of things on credit it might dip and it can take a few months of repays before it goes back up again.
How do I find out my score?
There are quite a few free websites out there now that offer the service for free. Experian and Clear Score are some of our favourites. They offer free and paid for versions if you would like more information about your credit score and how to improve it. They both get their data from Equifax and give you the average score for your age group and area so you can see where you stand.
Not all credit score companies use the same score system and therefore the number your score is out of may vary depending on the provider.
Find out your credit score today and start seeing what you can do to improve it and give yourself more options in the future.