MONEY TALK SUE’S GUIDE TO Corona Proofing Your Credit Score
Consumer expert Sue Hayward’s savvy finance tips and advice
Your credit score is like your financial passport. It opens doors to the best deals on credit cards, mobile phones and bank accounts, but if it’s damaged, it can mean you’re turned away.
Prospective lenders check your credit file before giving you the thumbs up and the UK’s three credit reference agencies – Experian, Equifax and TransUnion – all have their own way of scoring customers. Experian is the biggest and its credit scores run from 0 to 999. The higher the number, the better your score with the average being 776.
So here’s how to protect your credit score during these tough times…
◆ Keep up payments
Miss a payment on your mortgage, credit card bill or car finance agreement and it usually costs you 130 points. However, special rules introduced during the coronavirus pandemic mean you can get a three-month temporar y freeze on payments. Providing this has been agreed by your lender, it won’t affect your credit record.
◆ Look after your bank balance
Banks are offering some customers a three-month interest-free £500 overdraft during the pandemic. However, go over this and your credit score could pay the price. It can cost 70 points if you use an unauthorised overdraft.
◆ Card tricks
Maxing out cards, even if you clear the bill each month, can count against you. Ideally try to stay under 30% of your card limit. This shows lenders you can manage your money and can boost your score by 90 points.
◆ Check your credit score
It makes financial sense, especially before applying for credit. It’s free to check your score on Experian’s website, or get a free 30-day trial at CHECKMYFILE.COM which checks across all the credit reference agencies.
◆ When you apply for credit, lenders check your credit file.
◆ Credit scores run from 0 – 999, but 72% of us don’t have a clue what our credit score is.
◆ As a guide, under 720 and it’s a poor score and over 881 is good.
◆ The average score is 776.