New data released today by MoneySuperMarket reveals the full extent of the nation’s confusion around their credit score, with over a quarter (26 per cent) not knowing what one is, and over half (58 per cent) unaware of their current score.
Half of the nation (51 per cent) isn’t interested in trying to improve their credit score, despite 81 per cent being aware that having a good rating can help when applying for mortgages and credit cards.
The report also uncovers widespread confusion over the factors that can impact credit score ratings. A quarter (27 per cent) of 25-44 year olds incorrectly believe that when you get married, your credit score rating will merge with your partner’s. Men are more than 50 per cent more likely to believe that your credit score improves the richer you are, which isn’t the case.
The data – from the UK’s leading price comparison website – reveals that 25-44 year olds are statistically the most likely to know their credit score (44 per cent), while those over 45 are considerably less likely to understand the benefits of a good rating. Only 38 per cent of those aged over 45 are taking active steps to improve their credit rating, compared to 52 per cent of those aged between 25-44.
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.”
Here are MoneySuperMarket’s 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. That’s why it’s important to pay all your bills on time and set up direct debits where possible.
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. The easiest way to build up a credit history is by starting simply – for example, using a credit builder card can help here.
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. Similarly, you can add a ‘notice of correction’, which allows you to explain why a payment was missed. If there is a mistake and you need proof of payment, you may have to apply to the court for a ‘certificate of satisfaction’. You have to pay a small fee for this, but it will improve your credit rating.
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.
Visit MoneySuperMarket’s free Credit Monitor app to access your credit score and get personalised tips to improve your rating.