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Don’t be shut off from credit

Don’t be shut off from credit

Category: Credit cards

Updated: 16/08/2016
First Published: 16/08/2016

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Having a decent credit score is vital if you want to secure access to mortgages, loans or any other form of credit, yet unfortunately, a worrying number of people don't seem aware of this fact – and are being shut off from credit as a result.

New research from Amigo Loans shows that only one in eight respondents have ever checked their credit score – meaning that 88% of people have never checked – highlighting a worrying lack of diligence when it comes to this area of financial management. They could potentially get a nasty shock if they were to apply for credit, as without knowing their score, there's no way of knowing if they're deemed trustworthy of not.

However, even those who have checked may not be much better off, with 76% having a score of less than 720. This puts them in the "poor" to "very poor" category – and means that banks will often refuse them credit as a result. Unfortunately, some of these may be unfairly tarnished, with 34% of those who have checked their score finding glaring errors on their report, which further highlights the importance of checking.

Glen Crawford, CEO at Amigo Loans, said that there's a "computer says no culture that runs rife within UK financial services; once your credit record is tarnished, high street lenders will close the door on you… [Our research suggests that] over 20 million people in the UK could have a poor credit score, and what's worse, the majority have no idea."

He said that a clear issue lies in education, and considering that many people are unaware of the factors that can affect a credit score, this is definitely something that needs to be worked on. For example, common reasons for a poor credit score include late and missed bill payments, unauthorised overdrafts and credit card rejections, yet almost half of respondents (44%) admit to doing at least one of these.

Indeed, 22% admit to missing a monthly phone bill and 17% say they've gone over an agreed credit limit, while 19% have fallen into an unauthorised overdraft. Furthermore, one in five people didn't know that having no credit history at all could affect their chances of getting a mortgage, when in fact, it can be just as damaging as having a low score.

This can only mean one thing – it's time to get educated! Start the process by checking your own score (head to a credit check provider such as Experian CreditExpert to get the ball rolling), and if it could do with a bit of a boost, read our guide
on improving things. Make sure to keep on top of things thereafter, and hopefully, you'll never be shut off from credit again.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.