5 reasons to care about your credit score
From getting a phone contract to buying a home – your credit score can affect your lifestyle and future plans.
Your credit score shows lenders how reliable you are at borrowing and repaying money.
Things like missed or late payments, as well as continuously going into your overdraft, can lower your credit rating.
Here, we look at why it’s important to look after your credit score.
- It can affect your chances of getting a credit card or loan
Whether it’s a credit card, student loan or car finance, chances are you’ll want to borrow money at some point.
A good score can help you get approved for credit, while a bad score can stop you getting approved.
Gym memberships and phone contracts are also types of credit agreements. Companies like these may also run a credit check before deciding to offer you their products or services.
2. It can impact the types of deals you’re offered
To get the most competitive credit card rates, for example, you’ll need a good credit score.
If you have a poor credit score, you may find you’re offered a higher interest rate or a smaller credit limit. This means, it can cost you more to borrow money and you may be limited in the amount you can borrow.
3. Employers may be able to see your credit history
Potential employers are unable to see your credit score when you apply for a job (as it contains personal information). But they can see a modified credit report, with your consent.
A healthy credit report can work in your favour. But if you have a history of missed payments, you may be seen as a high-risk candidate, especially if the role involves managing money.
4. It can affect your ability to rent
When it comes to renting a property, the landlord may check your credit history as part of their screening process when choosing tenants.
After all, they’re trusting you to pay rent on time and they’ll want to see that you’re a reliable tenant.
5. It can affect your ability to get a mortgage
If you hope to buy your own place one day, then you should know that your credit score can affect your mortgage application?
When you apply for a mortgage, you’ll have to supply documents such as bank statements. This shows lenders whether you can afford the repayments. However, to predict how you’ll manage the debt in the future, lenders may look at your credit history too.
If you have a poor credit score, lenders may decide you’re too much of a risk and not accept your mortgage application.
Having a good credit score can bring you closer to owning your own home.
How to improve your credit score
The good news is, small changes can bring your credit score up.
Things like paying your bills on time and registering to vote can improve your score. Even checking your credit report to make sure there are no mistakes can help.
