Why does my credit score matter?

If you’re about to apply for a loan or credit card then it’s a good idea to check your credit score first and see how likely you are to qualify. But where do you get hold of your score, how much does it cost and what does it even mean? Felicity King-Evans explains all…

tbc
Your credit score is very important and not just when you’re applying for loans or credit cards. It’s also a way for you to check you haven’t fallen victim to identity theft. So how does it work and how does it work?

Your credit score is a three-digit number of up to 999 and your full credit file shows all the companies you have debt with, plus any addresses and people you’re financially linked to.

Different lenders have different criteria but, according to Experian, a score of between 961 and 999 is excellent, 881 to 960 is good and 721 to 880 is fair.

Lower than that and your score is poor or very poor and you’ll struggle to borrow money at a competitive rate. Some lenders will prefer not to lend to you at all.

Remember, checking your credit file yourself won’t lower your score, so it’s safe to keep an eye on it.

You can check your credit score for as little as £2 but there are also a range of services available from companies like Experian and Equifax.

You can compare the cost of the different credit agencies on our site. Just go to moneysupermarket.com/credit-monitoring

For example, you can sign up for an ongoing monitoring service for a few pounds a month, meaning the agency tells you when anything changes on your file or when it’s searched.

Remember that your credit file changes depending on your behaviour and even bad credit incidences like bankruptcy and CCJ’s disappear off your record after six years.

If you spot a mistake, you can get apply to get it fixed, so keeping a close eye on your file means you can check it’s accurate.

It’s always worth checking your credit score before you apply for a loan or credit card. There’s no point applying for a market-leading deal if your credit score simply isn’t up to it, you have to be realistic. More than one rejected application can also further damage your  credit score, so its worth taking the time to check.

However, even if you’re not in the market for a new credit card or loan, its still a good idea to keeping an eye on your score and make sure nobody is fraudulently using your name. It’s also a good way to keep track of how many unused credit cards you still have open!

Did you enjoy that? Why not share this article

SAVE MONEY NOW

Other articles you might like

Popular guides