There is a lack of understanding amongst UK consumers about what influences their credit score, according to research from Equifax.
Whether you are applying for a mortgage, buying a car or applying for a credit card, having a positive credit score is vital. However, it appears that many Brits do not understand what can help or hinder their credit score
A third (33 per cent) of UK consumers believe that being on the electoral roll has either no impact or they don’t know what impact it will have on their credit score
Half (52 per cent) believe using a significant proportion or all of their available credit will have no impact on their credit score, or they don’t know what impact it will have
One in five (22 per cent) believe that having a County Court Judgment (CCJ) will have no impact, or they don’t know what impact it will have on their credit score
“There are certain elements on a credit file that will always have a positive impact on a credit score, such as being registered on the electoral roll,” explained Lisa Hardstaff, Equifax credit information expert. “However, surprisingly, a third of UK consumers believe electoral roll registration either has no impact or they don’t know the impact it has on their score.
“Nearly a third (32 per cent) of respondents to our survey also didn’t believe that having a record of prompt payments on short-term debt would have a positive impact on their credit score – they thought it would have no impact or a negative impact or simply didn’t know what difference this information would make.
“And what would seem like obvious factors that could have a negative impact on a credit score, such as using a significant proportion or all of their available credit and even having a CCJ, were also things that at least 1 in 10 consumers thought wouldn’t affect their credit score.
“We were quite surprised by these findings, when considering that nearly half of people questioned (48 per cent) had applied for credit in the last five years, and over half (53 per cent) thought it was important to have a good credit score. Clearly consumers understand that having a good credit score is important – but they don’t seem to realise what will contribute to that.”
According to the data, 25 to 34 year olds seem the least clued up about what impacts their credit score, with the over 55s being the most knowledgeable.
More than 30 per cent of 25 to 34 year olds didn’t recognise that being declared bankrupt will have a negative impact on their credit score; 18-24 year olds were more aware of this risk, with only just over 12 per cent thinking it would have no impact or they didn’t know the affect
Over 20 per cent of 25 to 34 year olds believe that being late or missing a payment will have no impact or they don’t know what impact it will have on their credit score; 11 per cent of 55+ respondents didn’t recognise the impact of late payments on their credit score.
Just over 30 per cent of 25 to 34 year olds believe that paying credit card bills on time either has no impact or they don’t know what impact it has on their credit score; only 16 per cent of 45 to 54 year olds lacked knowledge about the impact of this information on their credit score.
Hardstaff continued: “Our research highlights a distinct lack of knowledge amongst UK consumers about the impact of key information on their credit files, which is a concern when so much of consumer spending is still carried out using credit.
“Your credit file stays with you for life – it’s vital, therefore that consumers understand the influence that each piece of information has on their ability to access new credit.”
The Equifax Credit Report and Score is accessible for 30 days free by logging onto http://www.equifax.co.uk/Products/credit/credit-score.html. If customers do not cancel before the end of the 30 Day Free Trial, the service will continue at £14.95 per month, giving them unlimited online access to their credit information and score and weekly alerts on any changes to their credit file. It also includes an online dispute facility to help them correct any errors on their credit file.
Yeh yeh yeh… all of the above we pretty much know. What makes my blood boil is how all the above stops you from moving forward with your finances, and putting yourself in a better financial position. We want to move, free up the 130k equity we have in our property, use a very small amount of it (about 7k) to clear some old debt that is hanging around our necks like a lead weight. Downsize our interest only mortgage from 230k to 160k capital payback, and this is were it get’s really ugly! put down a 200k CASH deposit for a new property purchase of 360K! at this point I would like to say that the above would leave us mortgage free in about 17 years. The house in question is currently valued at 360k, now at a rough guess at current trends that would mean our house would be worth roughly (in 17 years time) about 475K But none of the above is possible because NO ONE will give us a new mortgage because of some slight bad credit… While I agree Credit agencies do work in principal, they are painting everyone with the same old brush. I’m not an idiot, I know what I have to do, we are in a very luck financial position… to those of you who have been paying attention, you may be asking where the other 100k is coming from! well it’s a gift.
So to wrap this up… I’m putting in the pot 200k and we are asking for 160k for a mortgage… even if my life goes tits up! the mortgage lender will still get his 160k back.
As a matter of fact I have already noticed mortgage lenders starting to relax there rules, they obviously must have realised they have shot themselves in the foot re new business.
Credit Scoring Agencies are loose wires indeed… they have people by the short and curly’s and are making peoples lives a misery! Just do a search on the internet a read all the horror stories about how people have tried to fix and correct bad marks on the reports, and not getting anywhere! or simply being ignored!!!
As per usual… all this will do is make the wealthy richer and the poor man on the street poorer… thanks for that.