Checking your credit score isn’t bad for you
🔸 Plus: Brits are spending more on fake tans 🔸 Dubliners are against Google's new on-campus pub 🔸 The $277 billion warning from Warren Buffet 🔸
Your 2-minute guide to demystifying money and making you richer
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Why regularly checking your credit score isn’t bad for you
If the idea of checking your credit score makes your stomach do a backflip because you think that it might somehow hurt your score… or you worry you’ll find yourself paying for yet another monthly subscription… or you’re just not comfortable entering your personal information online, welcome. This issue of Moneyin2 is for you — and it’s time we did some myth debunking.
But first, what exactly is your credit score?
(If you’re already a credit pro, feel free to skip ahead. But a little refresher never hurt anyone.) Essentially, “credit” is any money that can be borrowed and repaid to a financial provider. This includes credit cards, credit agreements (e.g., “Pay Monthly,” BNPL contracts like Klarna), car loans, and mortgages.
Your credit score is a figure ranging between 0 to 999 (depending on which credit reference agency you use: Experian, Equifax or TransUnion, more on that below) that represents how likely you are to pay back that money. Essentially, it’s a measure of your financial trustworthiness.
The higher your credit score is, the more creditworthy you are. A high score means banks and other institutions will be more likely to lend you money, and at lower interest rates. A low score can mean getting turned down for a loan, or only getting approved for loans with high interest rates. In other words, while good credit can make your life easy, bad credit can make your life difficult — and more expensive.
Your credit score is contained in your credit report
You can get your credit report online for free. You can always access your report via the credit reference agencies themselves, Experian, Equifax and TransUnion. You may also be able to access your report through your bank or credit card provider, just make sure you’re always using a reputable company/site. (In other words, don’t input all your personal details on any old site offering a free credit report. It could be a scam.)
Your report will contain:
Your credit score.
Key financial information, such as any loans or credit agreements that you have already taken out; credit payment history (including late or missed payments); and any outstanding credit balances and credit searches that have been run on you by other companies.
Information that could affect your creditworthiness, such as County Court judgments, bankruptcies, or insolvencies.
Do I have a credit score?
If you’re over 18 and have ever taken out any form of credit, then, yes, you have a credit score and a credit report.
If you’ve never borrowed at all, then you simply won’t have a score. Don’t be freaked out if you find you don’t have one— it simply means you haven’t built a credit history yet.
Perhaps you’ve heard the rumor that you stand to get the best credit deals if you’ve never borrowed money before? This couldn’t be more false. Until you have a credit history, it’s impossible for lenders to assess your creditworthiness. Only once you build up a positive credit history, which means borrowing and repaying your debt on time, every time, are you likely to be offered better deals.
So, what kind of score should I be shooting for?
Scores vary from reporting agency to reporting agency. Experian scores range from 0-999. You’ll need a score higher than 881 to have “good” credit. Equifax scores range from 0-700. Shoot for 420 to get into the good range. And lastly, TransUnion scores range from 0-710. With them, anything over 604 is considered good.
Does checking your credit score make it worse?
This is probably the biggest credit falsehood of all. When you check your own credit score, not only does it not have a negative impact on your score, it can actually benefit you: Regular checks on your score can help you spot any inaccuracies (or possible identity theft) quickly and work to get things resolved.
With that said, when lenders check your credit when you’re applying for a new loan or credit card, it’s called a “hard” credit pull, and too many of these “hard” checks can lower your score if they happen frequently. (Why? Because after too many of these pulls, it can give the appearance that you’re out there applying for loans all over the place, thus making you a riskier prospect.)
Do my salary or savings affect my credit score?
Nope. While these factors do contribute towards assessing how creditworthy you are, how much you earn or how much cash you have stashed in the bank doesn’t affect your credit score because these are not forms of borrowed money.
What if I have a really bad credit score? Will I still be able to borrow money?
Having a low credit score doesn’t mean you’ll be restricted from all forms of credit. Depending on your number, you may be turned down for certain types of loans, or loans may be more expensive for you until you can improve your score and your level of credit trustworthiness.
What’s the best way to improve my score?
Pay your bills on time, every time. It sounds like such a simple thing — and it is. But it’s easier said than done. Putting your bills on autopay is the best way to ensure you never miss a payment, or you can set calendar reminders that will let you know exactly when it’s time to pay a bill.
Where credit cards are concerned, you’ll also want to keep your credit utilisation level low. Don’t be put off by the fancy term — this just refers to how much of your available credit you’re actually using. An easy example: Someone who has £1,000 worth of debt on a credit card with a £2,000 limit has a higher credit utilization ratio (50%) than someone who has £1,000 worth of debt on a card with a £10,000 limit (or 10%). People with the best credit scores generally have a credit utilisation level of 30% or below. In other words, you never want to be anywhere close to “maxed out,” and ideally you’ll be able to pay your credit card bill in full every month. Carrying a balance not only keeps your credit utilisation level high, it can also keep your stress level high. Which is why debt free is always the way to be.
— By Kina Bhattacharjee
And for dessert …
Warren Buffet just sent a “$277 billion warning” to stock investors. Should we take note?
Google wants to build a pub on its Dublin campus and the neighbours hate it.
Former JLS band member Oritsé Williams was so poor when growing up that his family could not afford to pay for food and electricity and would rely on handouts from neighbours.
Brits are spending more – and getting fake tans - due to falling inflation rates and the football, apparently.
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