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What are Credit Scores?

1. Bills 2. How to pay your bills 3. How to set up a bank account
4. How to set up a savings account 5. Borrowing money 6. Credit score
7. How to budget and save 8. Education financial support 9. What to do if you're in trouble
10. Financial abuse  

6. What is a Credit Score?

A credit score is what banks, lending companies and other providers use to see if you will be accepted for:

  • Credit cards — including student credit cards;
  • Mobile phone contracts;
  • Some in-store/online cards;
  • Loans;
  • Mortgages;
  • Car finance

Credit scores prove that you have borrowed money in the past and have been able to pay it back.

 

What is my credit score?

To see what your credit score is, you can use the following websites:

Depending on who you are borrowing money from, they may use one of the above or all three to check your score.  If you find out which one they use, you will know if you are more than likely be accepted.  To find out what provider uses which, use Money Savings Expert Credit Reference.

Be Aware: Each credit score checker does their scoring differently, so do not be alarmed if they are different.

 

How to improve your credit score

To improve your credit score there are a few things you can do:

  • Register to vote — This is done via your district council;
  • Look into a credit builder card — Please be aware, credit builder cards will have a higher Interest rate than a standard credit card.  Interest will only affect you if you are not paying the full balance off every month;
  • Take out a store card — Be aware, however, that these do have high interest rates and the bill MUST be paid off in the time period set;
  • Try not to be credit checked often.  Every time a company checks your credit score, it leaves an imprint on your file for 3-6 months.  The more you have, the less likely you are to be accepted.  Before using any comparison website, make sure to check that they are not running a credit check on your name.  This is very likely if you are looking at car insurance, bank accounts, etc.

It is a lot easier to build up bad credit than it is good credit.  Building up bad credit can be caused by:

  • Having/using multiple address of residence — your place, your parents', a friend's;
  • Payday loans — these can wreck your credit score for a number of years;
  • Having debt (not student debt) and struggling to pay this off;
  • Missing any payments;
  • Having too many different types of loans, credit card, store cards.  Sometimes if you already have a lot of money available to you, some compaines can reject if you decide to use all up the money available to you at once.

 

I already have bad credit

If you already have bad credit, you can still improve your credit score rating by following the "How to improve your credit score" above or speak to your bank.

 


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