The following is a transcript of our monthly podcast, The Pension Confident Podcast. Listen to episode 31, watch on YouTube or scroll on to read the conversation.
PHILIPPA: Hello, welcome back to The Pension Confident Podcast. My name is Philippa Lamb. This time, we’re talking about a money topic you may never have thought about, your credit score. It’s an easy thing to forget about, but we all have one, even if we’re not aware of it. Why does it matter? Well, in the 12 months to April last year, more than nine million people were turned down for credit when they applied for it. Why? Well, most likely because their credit score just didn’t look good enough.
So today, we’re going to find out everything about how credit scores are calculated, how to check yours, and vitally, how to put right any mistakes you might uncover in your credit report. To help us understand all things credit scores, we have John Webb, who’s Consumer Affairs Manager at credit reporting company Experian. Clare Seal is an Author and a Columnist and a Content Creator. And from PensionBee, their VP Data, Luis Mejia. Hello, everyone.
CLARE: Hello.
LUIS: Hello.
JOHN: Hello.
PHILIPPA: Thanks for coming in.
JOHN: Great to be here.
The usual disclaimer before we start. Please do remember anything we discuss on the podcast shouldn’t be regarded as financial advice or legal advice and when investing, your capital is at risk.
What is a credit score and why does it matter?
PHILIPPA: Before we get into the dark arts of the credit score, I thought I did want to ask you because I’ve got to confess, I had to look up my credit score to find out what it is right now. Do you know what yours is? I bet you do.
JOHN: I know.
PHILIPPA: But do you know? John should know, working for Experian. But do you know?
CLARE: Yeah, I know what mine is.
PHILIPPA: You don’t have to tell us.
CLARE: No, no.
LUIS: I think I checked it recently.
PHILIPPA: Did you?
LUIS: Yeah, I do know.
PHILIPPA: OK. Any shocks or happy surprises?
CLARE: I do a little financial check-in every month where I go through like a checklist of things. So check my credit score in all three places that it matters, go through a sort of spending plan etc.
PHILIPPA: OK, so no surprises for you then?
CLARE: No, never any surprises for me.
PHILIPPA: OK. Let’s start with the basics. John, what is a credit score?
JOHN: Yeah, great question. So I’ll try and keep this as simple as I can.
PHILIPPA: Sure.
JOHN: Because the credit score is a number that we, ‘we’ being a credit reference agency like Experian, will give you. That number just represents the information that’s on your credit report. So it’s how well you have managed credit in the past, usually for the last six years, and how well you’re currently managing credit, so you know your current outstanding debt and things like that, so that when you apply for credit, although the lender won’t see that exact number, generally, it’s a good indicator of how they’ll view the information on your credit report.
PHILIPPA: Clare, you check it every month. Why does it matter so much?
CLARE: Well, I think there are a few different ways in which it matters. There are times in your life when you might need to apply for credit, crucially, things like a mortgage or car finance, so things that are going to really impact your everyday life. So making sure that it’s reasonably good is going to give you access to better products, maybe better rates on things like loans. So it’s a really good idea to just make sure that you’re aware of it, doing small things that you can do to improve it.
PHILIPPA: OK, so, it’s an important number. It’s changing all the time. So who, apart from you, gets access to it?
JOHN: So if you apply for credit, then you’re giving a lender permission to view the information on your credit report. When they look at the information, they’ll calculate their own score for you when you do that because they include other bits of information that aren’t included on your credit report. So that process of you know, when you make your application for credit, they’ll look at the information on there. But as for the score you see from a credit reference agency, that’s personal to you. You see that and that’s just, you know, that’s your indicator of how well you’re doing in terms of your credit history and borrowing.
PHILIPPA: But if you’re applying for a mortgage, your mortgage provider is going to be able to see it. If you’re looking for store credit the store is going to be able to see it.
JOHN: They won’t see the number, they’ll see the information, and that will get fed into their own calculation. So, that creates the number. Well, they create the number for you when you apply.
PHILIPPA: So, Luis, I had heard, and I don’t know if this is true or not, that potential employers can check it. Is that right?
LUIS: I’m not exactly aware of the privacy on the terms, but what I just want to say is apart from credit score, there might be some other information that is available from you that already is building your profile.
JOHN: Yeah, so that’s a good point. Actually, when you apply for a job, now, quite often they’ll do a background check. Some of that might include some type of check. Now, it varies depending on the company. So you might do a background check and that includes a search of public record information. So they want to know things like court judgments or bankruptcies, things like that, for example. But if you apply for certain roles in certain companies, now that’s usually financial services…
PHILIPPA: Trust roles?
JOHN: Then that will involve a deeper check into your credit report, and they might see more information than, you know, if you just applied for any other type of role.
PHILIPPA: Got it.
Credit score jargon explained
PHILLIPA: That does bring me to a key point, I think, actually, the jargon around this, because we’ve already thrown around quite a lot of phrases and words and I wonder if it would be good to just clarify some of that jargon. We’ve talked about credit score, credit rating, they’re the same thing?
JOHN: Same thing. Yeah.
PHILIPPA: OK. Credit file, credit report?
JOHN: Same thing.
PHILIPPA: OK. Luis, credit invisible? Tell me about that. That’s a phrase not everyone will know.
LUIS: Yeah, it’s a very familiar term for me, which I just came across because I was trying to understand my own situation. So I’m originally from Mexico, so I came here to this country 10 years ago as an immigrant. Just like many other immigrants, I think we face the reality of the barriers that the financial system in any country can put across. So I understand that even opening a bank account would be difficult for me just because there wasn’t enough information.
PHILIPPA: So they have no data about you? They don’t know whether they can trust you with a bank account or credit or a loan of any kind?
LUIS: Yes, exactly. It’s just a realisation that even if I was already a ‘known person’ in my country, here I was invisible. It’s been 10 years for me to build that visibility and history and really build up that profile that now gets me to a point where I feel comfortable accessing financial products. But there’s millions of people that fall into that category, and they don’t know how to get out of that.
PHILIPPA: Because it’s important, isn’t it, Clare? It’s a lot of people, five million people in the UK, described as credit invisible.
CLARE: Yeah and I think there’s another term that we’d use, which is having a ‘thin file’. If you haven’t got very much information available in your credit file and that’s where this, sort of, received wisdom of “get a credit card because it’ll improve your credit score” comes from. But obviously, that tip on its own can be quite dangerous because what you have to do is manage that credit well to build up your credit file, give lenders more information about how you manage your borrowing so that you can be trusted with, you know, bigger financial products like a mortgage, like a car loan. So you know, adding the right information to your file, if you’re credit invisible or you’ve got a ‘thin file’, is key. Not just adding any information whatsoever.
PHILIPPA: Yeah, because a ‘thin file’ sounds like a bad thing, doesn’t it? But it isn’t necessarily a bad thing. It just means that you haven’t applied for credit, and so they don’t know much about you. It’s not necessarily that you’re a bad risk. They just don’t know.
CLARE: A ‘thin file’ is an opportunity, I think.
PHILIPPA: Nice way of putting it.
CLARE: It’s an indication that you’re just starting out.
PHILIPPA: So this might be things like putting utility bills in your name, that sort of thing, just to build your presence.
JOHN: Exactly. So if you think about it this way, you need, like Luis said, a history of managing credit so that when you go to a lender and you say, “I want to borrow this for a mortgage” or “I want a loan”, they look at it and say, “Actually, you know what? You’ve used accounts before, credit accounts. You’ve paid them on time and you’ve repaid them. That’s great. That’s what we love to see.” So it’s about building the history behind it. So never go out and take certain types of credit just to build your credit report. So not things like loans, mobile phone contracts, really anything that just you might be charged for, pays interest for, for example. Credit cards, like you said, was a really great way to do it if you manage it in the right way. So keeping your balance as low as possible, repaying it every month so you don’t pay interest on it.
But if you start building history over time, and like you said, utilities, if you get to the point where you’re renting a property or you get the opportunity to do that, adding things like the gas, electric, water, that all counts. If you get to the point where you need other things like home broadband, TV subscriptions, maybe, that’s all the stuff that then in time starts to come onto your credit report. And as long as you repay on time, that’s where you build a really positive history.
PHILIPPA: OK, so it’s about looking reliable, demonstrating you’re reliable, not necessarily about borrowing money?
JOHN: Demonstrating that you’re low risk, which means you open a credit account and repay it on time. That’s the crux of it.
PHILIPPA: Registering to vote? Good thing?
JOHN: Yes. Very good thing.
PHILIPPA: Does that help?
JOHN: Actually, it helps in a couple of ways, but the primary way is actually identity checks. So you explained you came in [to the UK], you might struggle to open a bank account, for example. But actually, if you’re not registered on the electoral roll, lenders can struggle to confirm your identity, and they - that might end up with a credit refusal just because you’re not registered.
PHILIPPA: And that refusal, then presumably goes into your record and doesn’t necessarily look like a good thing, does it?
JOHN: It does for a year. The refusal doesn’t actually, just the application for credit does. But more of those in a short space of time can lower your score.
LUIS: I’ve been in this country 10 years with already a credit history. I have established myself financially here, but I still can’t register myself to vote because I don’t have British nationality. So I think for me, I definitely agree in terms of the education of steps that you can take but I’m just trying to put across that it’s very important to define different personas when you’re trying to do that because not everyone is in the same situation.
JOHN: So if you can get on the electoral roll, great. If you can’t register, you can add a note to say, ‘Please ask me, and I can confirm my identity’, usually official documents, ID documents, things like that. So if you can register, and it also can give your credit score a bump as well. So Experian it’s up to 50 points. It’ll be slightly different in the other agencies, but it can help. It’s definitely worth doing if you can do it.
How is a credit score calculated?
PHILIPPA: This whole business of building a credit score, it’s more complicated than you might imagine, isn’t it? I’m wondering what else goes into the calculation. What about things like personal circumstances, having dependents and where you live? I mean, does any of that play into it?
JOHN: There are lots of things that go into calculating the score, but I’ll start with the things that don’t because you mentioned them. Anything to do with your personal circumstances, your salary, dependents, some other expenses and so on, race, ethnicity, sexuality, those kinds of things, they’re not included on your credit report. But they’re factored in when you apply for credit, not race and ethnicity, for example. But when you apply for credit, you’ll tell them in your application form what your salary is, certain expenses, like childcare expenses and so on and that forms part of your affordability check.
PHILIPPA: It’s a lot, isn’t it, Clare?
CLARE: Well, and I think in a similar vein, if you’re talking about, kind of, relationship status, one of the things that loads of people don’t know about is that if you’re financially linked to someone, so if you’re married, if you have a joint account with them, then their financial behaviour impacts decisions made about your applications as well. I’ve spoken to a lot of people where there has been financial infidelity in their relationship or you know hidden debt, etc. And loads of people don’t understand that if you’re married or if you have a joint account, your financial behaviour impacts the other person and vice versa.
PHILIPPA: What about if you divorce that person or you separate from that person? How do you sever that in your credit record?
JOHN: Yeah, so it’s a really good point. Actually, it’s not, it’s not being married that does it. So actually, it’s kind of, it’s slightly a myth, but it’s not being married, it’s not living with someone, it’s not someone in your family or just that you’re in a relationship with someone. As Clare said, it’s just - the process actually is applying for joint credit together, and it creates what’s called a ‘financial association’ and links you two together. It means when you go and apply for credit, the lender can check that person’s information as well. So if they’ve not been good at managing their credit, it means you could be refused or you could pay more. If you shouldn’t be connected, so you have no open joint accounts together, you could do what’s called a ‘financial disassociation’. You break that link, you have to do it with all three credit reference agencies to do it. It’s a fairly simple process online. But you do that, you break the link, and that way your report is then stand-alone or that person is at least not connected to you anymore.
PHILIPPA: OK. So thinking about other ways of being associated with people, what about people who are all renting a place together. They’re not involved with each other, they’re just flatmates, but they’re all on the lease or they’re all on the rental agreement.
JOHN: That won’t financially connect you. No. The only way it happens is if, like I said, you open a joint account. So something like a joint bank account, a joint loan, obviously a mortgage, joint mortgage as well. Credit cards aren’t a linking account because you add someone as an additional card holder. You’re still the main card holder.
PHILIPPA: Oh OK, that’s an important point.
JOHN: You have to be careful if you add someone as an additional card holder because the onus is on you, and that’s your account, to be in charge of that.
PHILIPPA: Is there any issue about where you live?
JOHN: It can slightly, based on how a lender will interpret that information.
PHILIPPA: OK. Clare, it does seem to me this is all so personal, isn’t it? And most of the time, we just wander through life not thinking about it. But given that almost everything is online now for many of us, our spending habits, the stuff we don’t really think about, the sandwich we buy, the train ticket we buy, that must all play into this.
CLARE: Yeah, I mean, I think so. There are so many more opportunities to spend money. Obviously, with the sort of dawn of the Buy Now, Pay Later era…
PHILIPPA: Klarna and other providers, yeah.
CLARE: You have to be really, really careful with what a slippery slope that is.
PHILIPPA: Yeah, because they’re so heavily promoted, these things, aren’t they? It’s so easy to do, isn’t it?
JOHN: They’re included, at least some of them. They’ve started reporting to credit reference agencies. Klarna reports to Experian, and others report to other credit reference agencies as well. They don’t factor into credit scores as we’d give them to someone yet and that’s because we’re early days.
PHILIPPA: Because that’s the direction of travel, presumably for the industry, as you say. It doesn’t factor in now, but in the future, who knows?
JOHN: It’s moving that way, and at some point, it’ll factor into credit scores because lenders will feed back to the credit reference agencies how they’re taking that information. So if you had 30 loans, for example, that would have a serious significant effect on your credit report. If you had 30 Buy Now, Pay Later accounts, which technically they fall into that same bracket, then that would seriously impact any other application you make. So they’ll be viewed slightly differently. Lenders are feeding back to us to say, actually, “this is how we’re viewing them”. Not quite in the same way, but the more new accounts you have, usually the more it’ll impact your credit score negatively.
How do I know if my credit score is good or bad?
PHILIPPA: OK, so we’ve done quite a lot of digging, haven’t we? Into how all this works. I’m going to get to the crucial question, which is obviously really, how do you check? And what is a good score? What is a bad score?
Now, it’s the three organisations you mentioned earlier, isn’t it? It’s Equifax, and then Experian, your own, then TransUnion. You can just go on their websites, open a free account and find out?
JOHN: Yes, exactly. So of course, you can come to Experian and check your free credit score. You can do the same with the other credit reference agencies as well. Importantly, like I said at the beginning, check your credit report. You can check that for free. Statutory Credit Report, it’s called. Ideally, annually. So do it once a year.
PHILIPPA: Unlike Clare, who does it every month?
JOHN: Well it’s great, it’s great to check it, this is perfect, but it’s great to check in on your score but check your report once a year and before an application, but really once a year is great.
CLARE: It’s a really good idea to check your report if you notice a sudden change in your score. And this is why I check it every month. So I’ve got a 15-month-old daughter, and when she was born last year, fell over when a repayment was due on a small loan that I took out when we moved house a couple of years ago. And on the day that my daughter was born, I hadn’t done that.
PHILIPPA: You had your hands full though, didn’t you?
CLARE: I did, and my loan payment bounced.
PHILIPPA: OK.
CLARE: The next day, I phoned up and made it manually, but…
PHILIPPA: The next day, after you’d had your daughter?
CLARE: I did, yeah.
PHILIPPA: It’s impressive, isn’t it?
JOHN: That’s keeping control of your finances.
CLARE: She was… Well, this is, this is because I have everything set up to notify me on my phone, you see?
PHILIPPA: Understood.
CLARE: Also, she’s my third. So it was very much… It was par for the course.
PHILIPPA: No problem.
CLARE: But in the window between when the payment bounced and when it was made, the monthly submission of information to the credit reference agencies had happened.
PHILIPPA: OK.
CLARE: And it’d been recorded as a missed payment. And so I noticed then, a couple of months down the line, that my credit score had tanked, even though -
PHILIPPA: Really tanked? Just over that?
CLARE: Really tanked. But because I noticed that, I called my loan provider. They said, “Oh, this is what’s happened. I’ll put a note on your file. If you contact all the credit reference agencies with a query, we can let them know“. And so I did that. I submitted a form on each of the three. It took -
PHILIPPA: Fiddly?
CLARE: It was fiddly but it took 45 minutes, and it meant that that information was wiped from my files.
LUIS: That’s a specific case where you were aware of the payment, fortunately you could solve it, but nowadays with this era of awareness for scams and identity fraud but just by simply checking your report and understanding what’s been impacted you can identify whether a loan was taken under your name or a credit card’s been taken out in your name or someone has been spending money under your name.
Spotting and correcting errors in your credit report
PHILIPPA: Talking about correcting errors, and obviously, is a properly good idea to check it because clearly stuff happens. Is there a point at which it’s too late to correct something? If you go and check your credit report, maybe for the first time tomorrow, and you see a thing on there and you think, ‘Well, that’s not right’, but it was three years ago. Is there anything you can do about that?
JOHN: Absolutely. We keep data, generally, for six years. That’s usually someone’s credit history. It can be slightly longer sometimes if you’ve had a bankruptcy and you’ve had some restrictions, goes on for a bit longer, for example. But generally, six years. If you check your credit report and you see anything during that time that’s incorrect, and I should say they’re quite rare to have errors on there. But if it happens, you get in touch with us, and it’s all a free service, so you get in touch with us, you say, “right, this was the error”, and we’ll go off and we’ll query it with the company directly, just like Clare said.
PHILIPPA: I understand you’re saying it’s rare to find mistakes, but I suppose the question in my mind is, how do you know that? Because if people don’t check, they don’t know if they’re there, do they?
JOHN: Well, that’s always why I say, check it.
Understanding your credit score
PHILIPPA: OK. Good scores, bad scores. If you look at the score, you look at the number, and think “what does this mean?”. Tell us, talk us through that.
JOHN: So, firstly, I think really important to set the scene is you’ll check the credit score from one of the credit or all three credit reference agencies. We’ll all have slightly different bandings. Now, they typically work in the same way. A missed payment will negatively impact your credit score. Low outstanding debt will positively impact your credit score. If you check it, don’t compare the agency’s score. So don’t look at Experian and say, “Right, I’m 900 with Experian, but I’ve checked my TransUnion score and I’m only 600 with TransUnion.” So don’t compare them.
PHILIPPA: Yeah, that was my question. I mean, that happens, right, so?
JOHN: Yeah, absolutely.
PHILIPPA: So, how do we actually understand where we are then?
JOHN: View them as stand-alone scores. Just look at each agency individually and say, “Right, I’m Experian. I’m sitting in the good banding, and this is where I stand. I’ve checked the other credit reference agencies, and I’m in this banding for this.” And also, just worth highlighting, you can have some differences in credit reports as well. It’s not all identical information. You might have a couple of accounts with one credit reference agency that aren’t showing with the other two.
PHILIPPA: OK.
JOHN: So your score can be slightly different anyway.
PHILIPPA: Do you find that, Clare, when you check?
CLARE: Yeah, for sure.
PHILIPPA: Are they very different?
CLARE: Not wildly, but in actual fact, there have been points where there have been big discrepancies. And I think the important thing is, yeah, to just treat them as all pieces of your bigger, financial puzzle.
How to improve your credit score
PHILIPPA: So if you’ve got a good score, if you’re happily in that place, how do you look after it? How do you make sure it stays good?
CLARE: From my perspective, keeping on top of those monthly payments and correcting anything immediately. Your utilisation, so if you’ve got credit cards, this is something that was never explained to me when I was younger, but really, you don’t ever want to be going over 30% of your total limit.
PHILIPPA: Why is that?
CLARE: Because the higher your utilisation, the more it’s going to impact your score.
PHILIPPA: That’s interesting. So if your credit card company is saying, you can spend £5,000 if you want to, you shouldn’t be doing that, even though they say you can, and you think you can pay it.
CLARE: Not long term. I’d say, ideally, you do want to stick within that 30%. And lots of people use credit cards on a rolling basis, right? So they use them to pay for a certain thing. Maybe they put all their petrol on there and they pay it off in full every month. The crucial thing there is to wait until your statement so that the fact that you’ve used it has registered.
JOHN: Exactly the point I was going to make. Keeping the balance as low as possible is really good for your score. The closer you get to what we’d say is maxing out your credit card is not particularly good for your credit score. It will reduce it. And if you’re, like Clare said, in this scenario where you’re using it on a regular basis, you put all your spending on there and we pay, you might get benefits on your credit card, for example, for doing that.
PHILIPPA: Yeah, yeah, yeah.
JOHN: That’s fine. Absolutely a great way to use your credit card. However, if you’re applying for something really important, like a mortgage, what you might want to do is maybe avoid doing that a couple of months before you apply for it so that actually what you’re doing then is creating that available credit and you’re not maxing out your credit card because we’ll get the statement amount. If you’ve got a £5,000 limit and you spend £4,500 that month, your statement’s produced, although you’ll pay it off a few days later, we’ll know that you’ve spent £4,500 on there, and that’s on there till next month.
PHILIPPA: That is really useful to know. So, other end of the situation, if you’re looking at your credit scores, they’re not so great, what do you do to try and boost them up? If you’re thinking, ‘yeah, well, in a couple of years, I wonder if I might be wanting to try and get a mortgage’. How do you polish it up?
JOHN: There’s loads of ways to do it. But actually, the first thing I’ll say is be patient. These things don’t happen immediately. If you’re renting, you can share your rent payments with Experian, so you can add that information to your credit report as well. That will help if you’re making your rent payments on time regularly. We also have something called Experian Boost, where if you’re paying for certain things like digital subscriptions, Amazon, Netflix, Spotify, if you’re paying for your Council Tax regularly, if you’re paying into any savings regularly, you can get that information included in your credit score.
PHILIPPA: How do you do that?
JOHN: So it’s open banking. So you connect your bank account securely. We only scan for those transactions, so things like Amazon Prime, for example.
PHILIPPA: OK.
JOHN: And then you can boost your score by up to 101 points. That’s really great. If you’re looking for credit, your score is not particularly great, and it can unlock other lenders and other deals that are there. But the process of, you know kind of, building it up over time, making it look a bit better, is fundamentally, make your payments on time and try not to get into too much debt. So your outstanding borrowing will have a big impact on that. And if that’s why your score is low, work on a plan to bring it down over time.
PHILIPPA: One thought, I don’t know whether we’ve covered it, overdrafts, bank overdrafts. Does this play into it as well?
JOHN: It does.
PHILIPPA: It does? OK.
JOHN: Yes. So actually an overdraft will show, and it’s just how you use that overdraft as well. As long as you’re not going over your arranged overdraft limit, which isn’t good, then if you use it and you’re kind of repaying it, that’s ok.
PHILIPPA: But is it like a credit card? If you max out your overdraft, that’s a red flag, too.
JOHN: It’s not quite the same, but they do factor in, obviously, to credit scores because it’s an amount of debt that you owe.
PHILIPPA: So try not to max it out.
JOHN: Also, when you apply for credit, albeit not included in credit scores, what lenders often like to see is that you’re not stuck in the overdraft. They want to see you in a positive balance. At some point, during in the month, so that’s important as well.
PHILIPPA: OK. We’re running out of time. I had no idea there was going to be so much to talk about.
JOHN: Sorry, I’ll just talking. Keep going.
Busting credit score myths
PHILIPPA: I think it’s really interesting I really do. I just want to kind of bust a few kind of misconceptions around credit scores though. Actually, I wanted to ask you about this, Luis, which is about age, because I can see how you might think this stuff only really matters when you’re younger, because that is the time when you’re thinking more about mortgages, car loans, all that kind of stuff. I mean do retired people have to bother themselves about this? Does it matter?
LUIS: Yeah, of course, because like your financial life doesn’t stop when you retire. You’re still there, you’re still spending, you’re still reliable on financial products, you still might have like insurance policies you know or other products that support your retirement itself. So it does matter.
PHILIPPA: So this keeps on mattering. Actually, another slightly later life thing, student loans, Clare. If you get to the point where you don’t pay it off and it gets written off, does that impact your credit score?
CLARE: Not to my knowledge.
JOHN: No, makes no difference.
PHILIPPA: OK, final question, and I have to ask you this because when I said I was doing this podcast, two people asked me this, which was, if you keep checking it, and I think the answer to this must be no, because you check yours a lot.
JOHN: I know what you’re going to say.
PHILIPPA: If you keep checking your score, does it impact the score?
JOHN: It does not impact your credit score.
PHILIPPA: So you can check it every day. That’s not a problem.
JOHN: I would encourage anyone to check it every day. No, of course not.
CLARE: I think that’s the biggest myth around credit scores. It endures somehow the myth that if you check it, it will go down. I personally believed that for much of my 20s, and obviously, you can tell I don’t believe it anymore because I’m constantly on there.
PHILIPPA: Well, I’m glad we cleared that one up. This is obviously a huge misconception. People should go and check, and they should go and check right now. Yeah?
CLARE: Yeah.
LUIS: Yes.
CLARE: And don’t panic if your score is low. Even if your score is very poor, like the credit police not coming to take you away.
PHILIPPA: It’s worth remembering that.
JOHN: We’re not anyway.
PHILIPPA: I don’t think anyone is coming to take you away. I just want to be clear about this. This is between you and your credit score.
CLARE: Yeah, because I think there are, with loads of stuff to do with finances, it’s really hard not to sort of… When you see a number there it’s hard not to see that as like an assessment of you as a person. Just see it as something, see it as some information that you can use to improve.
PHILIPPA: It’s just where you’re at right now, isn’t it? It doesn’t mean you’re there forever if it’s not great.
JOHN: Exactly. To that point, they’re temporary. The data only lasts, stays on your report for six years, so if you’re not in a great place right now, that’s not the place where you might be in a year’s time or two year’s time or six year’s time. Even if you’ve been you know, bankrupt, for example, there’s always, you know, a light at the end of the tunnel.
PHILIPPA: Yeah, just better to know.
LUIS: Yeah. For me, we live in an era of data, fortunately or unfortunately. Don’t be afraid of things being done with your data itself, as sometimes you might panic about, like “Oh, my data has been sold here or there.” Most of the time, there’s a lot of companies that are trying to do the best for you. Most of the financial applications are there to help you.
PHILIPPA: That’s great. Thank you, everyone. Really really useful.
CLARE: Thank you for having us.
JOHN: Yeah, great.
LUIS: Thanks for having us here.
PHILIPPA: All good to know, right? Why not take a look at your credit report today and make sure it’s accurate? That way, you’ll know exactly where you stand when you make your next financial decision. Just before we go, our usual last reminder that anything discussed on the podcast shouldn’t be regarded as financial or legal advice. When investing your capital is at risk, thanks for being with us. If you’re enjoying the podcast, we would love it if you’d rate and review us. You know we always want to hear what you think. See you next time when we’ll be delving into how you can better understand your pension balance.
Risk warning
As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.
