Life can often feel super busy. Working on big goals like buying a house, saving for a wedding, or starting a business takes time. And money. So it can be a struggle to find the energy to put into building our financial health as well when we have so much on. But doing so can actually help you to achieve all the other things you want to do in life. A good credit score can be the key that unlocks the door to making our dreams come true. (Yes really.) Here’s why.
What is a credit score?
First, let’s look at what a credit score actually is. In this video Dani from LOQBOX explains everything in under three minutes.
So, a credit score is an indicator of how likely you are to be approved for credit were you to apply. It’s created by the Credit Reference Agencies, and it’s based on your credit history. The higher your score, the more likely you are to be accepted for a new credit agreement.
Your credit score can help you to decide whether to apply for credit or not. But remember, lenders themselves don’t actually look at your credit score. They look at your credit history. Be that as it may, your credit score remains an important tool for you to keep track of your financial health.
Why does your credit score matter?
Ok, so you have big goals in life. Things like getting married, buying a house, starting a business, or going travelling. We love big goals. But they often take both a lump sum of cash and good financial health to be achieved. If you plan to fund your dreams by borrowing money, a good credit score helps you to get approved for things like loans, credit cards, and mortgages. And it can help you to save thousands of pounds as it helps you to get the best deals.
But it’s not all about being able to get approved for new credit and at a good rate. Your credit history may get reviewed when you do things like take out a new phone contract, rent a new property or get a new job. When it comes to these things, a bad credit score can hold you back.
How to find out what your credit score is
Now if a lot of this is new to you, and you’re not sure what your credit score is right now — your next step might be to go and look it up. You can do this for free now via the links below:
Note that there are three links here. Why? Well there are three main Credit Reference Agencies (CRAs) in the UK. These are Equifax, Experian and TransUnion. These are private companies that compile your credit reports. They each own a different report on you, so it’s important to check all three.
Why might your scores differ?
Your credit score will differ across all three reports because each CRA has a different way of calculating your score. But another reason your score might be different across your three credit reports is that each credit reference agency may have collected different data on you. How does this happen?
Firstly it could be because the data each collects (or doesn’t) have come from different sources. For example, one lender might report to only one of the credit reference agencies but not to the others. This would be the case if you had a credit card from a company that reported to TransUnion but not to Equifax or Experian.
Or secondly, it could be because there are errors on one or more of your credit reports. You might be offered high rates of interest on credit arrangements if you have errors on your credit report, which can cost you money. That’s why it’s important to check each of your credit reports thoroughly and correct any mistakes you find. (Find out how to fix mistakes on your credit report here.)
How to improve your credit score
Ok, so you know what your score is and why it matters. You’ve looked yours up (all three). And now you might be wondering how you can go about improving it. Well, here’s how.
LOQBOX is the easy and free way to build your credit score, while you save money. So you can get on and achieve the big goals in life. They’ve already helped hundreds and thousands of people like you to do the same. Head to the Save Money tab in Emma and click on o find out more visit their website now.