More than a quarter of Brits don’t know what a credit score is
Brits are confused about credit scores, with 26% admitting they don’t know what one is, and over half (58%) unaware of their current score, said Moneysupermarket.
The price comparison site found that half of the nation (51%) isn’t interested in trying to improve their credit score, despite 81% being aware that having a good rating can help when applying for mortgages and credit cards.
The report also uncovers confusion over what factors impact credit score ratings. A quarter (27%) of 25-44 year olds incorrectly believe that when you get married, your credit score rating will merge with your partner’s. Men are more than 50% more likely to believe that your credit score improves the richer you are, which isn’t the case.
Only 38% of those aged over 45 are taking active steps to improve their credit rating, compared to 52% of those aged between 25-44.
Rachel Wait, consumer affairs spokesperson at MoneySuperMarket, said: “Our results show over half the nation are completely unaware of what their credit score is, and less than half are taking active steps to improve it. Having a good credit score means you’ve got a better chance of being approved for credit cards, loans and mortgages.
“Accessing your credit report allows you to better understand how likely you are to be accepted for products before you apply, reducing the risk of being rejected, which can make it harder to get credit in the future. There are a number of ways to improve your rating with minimal effort, such as remembering to pay key bills on time or registering on the electoral roll, which provides proof of address.”
Top tips to improve your credit rating
1) Pay your bills on time. A missed payment can leave a mark on your file that can impact your credit rating for years afterwards. That’s why it’s important to pay all your bills on time and set up direct debits where possible.
2) Build up your credit history. If you’ve never borrowed before, you’ll have no credit history, so lenders won’t be able to see if you’re a responsible borrower. The easiest way to build up a credit history is by starting simply – for example, using a credit builder card can help here.
3) Check your report’s accuracy. Sometimes the information on your credit report can be incorrect. If something looks wrong, contact the provider to correct it. Similarly, you can add a ‘notice of correction’, which allows you to explain why a payment was missed. If there is a mistake and you need proof of payment, you may have to apply to the court for a ‘certificate of satisfaction’. You have to pay a small fee for this, but it will improve your credit rating.
4) Add yourself to the electoral roll. This provides proof of address and is checked as part of your credit score.
5) Close unused credit card accounts. A large overall credit limit, even if unused, could be viewed negatively by some lenders.