1/4 of people don’t know what a credit score is and over 1/2 half are unaware of their current score
In spite of its importance when applying for loans, credit cards or mortgages, 51% of people aren’t interested in trying to improve their score though most understand that a good rating can help access credit.
A recent report from MoneySuperMarket showed widespread confusion over the factors that impact credit scores. For example, 27% of 25-44 year olds believe that your credit score merges with that of your partner when you get married. That is not the case. At the same time, many people believe that credit scores improve with greater wealth.
The young (25-44 year olds) are most likely to know their credit score, while those over 45 are considerably less likely to understand the benefits of a good rating. Around half of those under 44 are taking steps to improve their rating, compared to only 38% of those aged over 45.
Rachel Wait, consumer affairs spokesperson at MoneySuperMarket, commented: “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.
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.
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.
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.