It’s hard to ignore the fact that lots of people in the UK aren’t credit savvy. Research from Amigo loans at the beginning of the year showed that 88 per cent¹ of Brits don’t know their score, while consumer group Which? recently revealed that 77 per cent of people believe banks have a uniform credit blacklist and 60 per cent think credit reference agencies make decisions on whether banks provide credit or not.
Luckily, there are now millions of clued-up Noddlers around the country that have access to their credit score and report. This is the first step to taking control of your finances and getting the things you want in life, whether that’s a new home, fast car or a new job. However, the above survey from Which? also suggests that people aren’t using their score to build their financial health over the long-term, with 53 per cent of households admitting they don’t check their credit score. This means loads of people are getting their credit score to help them with a short-term goal but then forgetting about it. Yet to be financially healthy over the long-term, it’s important to check your score regularly throughout your life.
Why is it important to regularly check your credit score?
Ultimately, your credit score and report let you know if your choices are helping or hindering your ability to be approved for credit based on how financially stable you are. They also help you make sure no one is applying for credit in your name by highlighting changes to your accounts and debt profile. So, if your score goes down and you don’t know why, you can go into your credit report, see what’s changed since the previous month and take action against it if that activity wasn’t your own.
Get into the habit of checking your score
To get the most out of your credit score, you need to get into the habit of checking it regularly. Noddlers get an email every time their score has been refreshed, so this is an easy way to remember to check it.
Alternatively, you can use things like calendar reminders or make a mental note every time you check your bank statement to see how your credit score is looking as well.
By getting into this routine, you’ll automatically become more aware of your credit score, report and overall financial health.
Use your score to limit risk and grow your financial health
Knowledge is power: It’s important to not just have life-long access to your credit score, but also to be able to drill down into what’s affecting it so you can create a plan for improvement.
You can find out more about how to improve your credit score here.
Increase your chances of being approved for credit
Getting a credit card or loan is one of the main ways to improve your credit score if you have a limited credit history. Similarly, it’s often easier to make larger purchases on credit – be that store credit, credit card or a loan – to allow you to pay goods and/or services off monthly in a manageable way. However, if you don’t have a good credit score and aren’t aware of it, you could find it difficult to borrow and may be turned down.
Consequently, it’s always a good idea to check out your credit score before applying for any form of credit. Even if you’ve seen your score in the recent past, look again before making a credit application in case something has changed. By giving yourself as much information as possible going in and making any necessary changes to improve your score, you will be in the strongest possible position to be approved.
It’s also useful to be able to see the cards and loans you have the greatest chance of being approved for, which you can access from your dashboard if you’re a Noddler.
Use your credit score to plan your purchases
Even if you’ve got a perfect score, putting big buys like holidays on a credit card can give you purchase protection, rewards and peace of mind. However, before you splurge, it helps to look at your credit score to see if you’re in a position to do and then check it after you’ve used a line of credit to see the effect it’s had. This will help you make smarter decisions when it comes to buying big ticket items because you’ll have a clearer idea of what it does to your credit score.
Make your credit score and report a layer of defence against fraud and ID theft
An unexpected drop in your credit score can be a warning sign that something has gone wrong, whether due to a simple mistake or fraud and ID theft. Checking through your report will help you see if any searches on your credit report or applications for credit have been made without your knowledge. You’ll also be able to check that all your loan and credit card information is correct.
Life-long credit habits for continued stability
By using your credit score in the ways listed above, you’ll start to get into habits that will help you get and keep control of your finances. While you might not realise it, your credit score plays a huge role in many key events throughout your life, so it’s important to look after and nurture it if you want to be financially healthy over the long-term.
¹Figures taken from a sample survey of 1,067 people in May this year by consumer group Which?