Nine out of ten people are not aware of their credit score

New research reveals that 9 out of 10 people don’t know their own credit score and of those that do, the average score is “poor” sitting at 567.

The study by Amigo loans, which surveyed 2,000 UK adults, paints a gloomy picture of the UK’s credit landscape and shows those aged under 24 are the worst affected with an average score of just 300, classed as ‘very poor’. This means that they are likely to struggle to secure the best deals on mortgages, credit cards or a mobile phone contract.

45-54 years olds, who have had the time to build a good history of borrowing and paying off debt, come out on top with an average of 659. However, this is still classed as a “poor” credit score under UK guidelines.

Industry research claims half of UK adults are likely to be refused credit. From accessing a mortgage to getting the best tariff from energy providers, consumers often need to pass a credit check. Poor credit ratings are not only confined to those with a poor financial past – even missing one payment or dipping into an unauthorised overdraft can have a huge impact.

With such a significant proportion of the UK population not even knowing their credit score, it highlights that credit scores are inherently misunderstood or ignored by general consumers.

Glen Crawford, CEO at Amigo Loans, which commissioned the study said:

“There is a huge lack of understanding about credit scores; it’s a complete myth that we have one universal ‘score’. It’s crucial that people, who believe they do have a chequered financial history, take positive actions to improve their credit file, so they will be more likely to be accepted for mainstream financial products in the future, such as a mortgage. Borrowing with Amigo is one way of doing this.”

 Amigo loans has collated top tips for improving your credit score:

  • Make sure you are on the electoral register. Lenders use the electoral register to help fight identity fraud and confirm a person is who they say they are and that they reside at that address.
  • Pay bills on time or ahead of schedule, a good credit score needs to be built up over time – lenders will look favourably on this.
  • If you notice anything on your credit report that could be incorrect or you think you might be the victim of identity fraud, i.e. you think someone has applied for credit in your name, contact the credit reference agency who will work with the lender to try and resolve the issue.
  • Avoid keeping a high balance on your credit card. Lenders may view it as excessive debt and be concerned about your ability to repay.
  • Only apply for products when you really need them – applying for more than four forms of credit in a year can lower your credit score.
  • Do not make multiple applications for credit as this can have a negative impact on a credit record.
  • Close down out of date credit cards and make sure you cancel old agreements, such as store cards you never use, as these will still appear on your file. Lenders may be wary about the potential size of your debt.
  • Sever old financial relationships if you are divorced or separated, making sure your former partner’s details are removed from any joint accounts. The credit history of all financial associations such as a spouse or anyone else you have a joint bank account or loan with can affect your credit rating.
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