POUND NOTES
Spend wisely
Brits are in danger of wrecking their credit score without realising it, by gambling regularly or lying about earnings when applying for credit.
Your credit report is a history of all the credit you have taken out in the last six years, including overdrafts, mortgages, credit cards, mobile phone contracts and HP payments.
The data is held by credit reference agencies and lenders check this before deciding whether to grant you a mortgage, loan or credit card, and how much to charge.
Lenders want to see applicants spending wisely, said Michael Barlow, head of search engine optimisation at car finance provider Zuto: “Underwriters will look for signs of financial distress relating to gambling activity, to be confident you will repay your loan.”
Other risk indicators include an unarranged overdraft, missed direct debits, debt collections, payday loans and hefty overall borrowing levels.
Shoppers applying for Buy Now Pay Later (BNPL) credit, or store cards and instalment plans, are also taking risks by inflating their income to secure a higher credit limit.
First-time buyers are particularly vulnerable, with one in three admitting they lie about income, according to research from brokers First Mortgage.
Compliance director David McGrail said as well as breaking the law, it could jeopardise your chance of getting a mortgage: “You could end up with a higher credit limit, making it easier to fall into bad debt so you are refused credit later.”
To boost your credit score, make sure you are registered to vote on the electoral roll, pay all your bills on time and avoid high levels of debt. Check your report with one of the three main credit reference agencies, Equifax, Experian and TransUnion, and correct any mistakes.