At Noddle we often get asked why it’s so important to have and maintain a good credit score.
The answer is that these days, having a good credit score is incredibly important and can have a large and very real impact on your life in many ways.
Your credit score is part of your financial passport which shows potential banks and lenders who you are and how likely you are to manage their money if they lend to you. A bad credit score can make you a risky bet while a strong credit score is encouraging to lenders and can ensure you get the best deals out there, which saves you time, money and worry.
Buying the big things
By the big things, we mean those expensive life-changers such as a house or a car which you’re likely to need to take out a loan or mortgage to afford. Banks and lenders use your credit report and credit score to assess how you’ve managed your credit in the past and use this to predict how financially responsible you’re likely to be in the future if they lend to you. A strong credit score can lead to much better interest rates which on a large long-term loan such as a mortgage could mean saving thousands of pounds.
Getting a job
Not everyone realises this but employers will sometimes run a credit check on a potential employee before hiring them. There are many reasons this might happen and while it may vary by industry, an employer may want to see how responsible you are with your own finances and a poor score could limit your chances of promotion or even prevent you from being hired in the first place. While employers can’t run these checks without your permission, refusing the employer from doing so could make them even more wary and could mean you miss out on the job regardless of your score.
Starting your own business
Many of us dream of working for ourselves, managing our own company and dictating our own terms but before you hand in your notice you need to consider the strength of your credit score.
Starting a new business often requires large loans to cover the start-up costs but if your credit report shows you’re not good with your finances then it’s unlikely a bank will consider lending you what you need.
Mobile phone contracts
For some this one will be a surprise too but more and more people are finding themselves being turned away for a mobile phone contract, or not getting the one advertised in the window because of their credit score. It makes sense though, because when you walk out of the phone shop with a shiny new touchscreen with camera and coffee making function, the company is expecting you to pay them back over the next 18 or 24 months… just like a loan.