Your credit score is one of the most important numbers in your financial life. It can determine whether a lender will give you a loan or credit and the interest rate they will charge you for it.
Despite its importance, new research shows that there is a huge generational and geographical divide over credit score understanding in the UK. Here is everything you need to know.
Credit score understanding across the generations
According to research by debt management company Lowell, older Brits are generally more knowledgeable about credit scores than the younger generation.
Among 16–24 year-olds, the percentage of those who know how to check their credit score is 55%. This rises to 66% among 25-34-year-olds. Among 35-44-year-olds, 45-54-year-olds, and the over-55s, the figure is 68%, 72%, and 72% respectively.
Here are a few more related findings from the study;
- A third (32%) of 16-24-year-olds who know how to check their credit score check it multiple times a month.
- 35-44-year-olds, 25-34-year-olds and over 55s are most likely to check their score just once a month.
- Over 55s generally have a better understanding of what affects their credit score than young people. For example, 72% of over 55s know that missing payments is one of the main things that can negatively impact their score, as compared to just 35% of 16–24-year-olds. Meanwhile, 79% of 16–24-year-olds do not think ‘buy now pay later’ schemes can affect their credit score.
According to Lowell, the split in credit score understanding is not just generational, it’s also geographical.
For example, the UK cities with the best understanding of how to check credit scores are Cardiff (78%), Manchester (78%), Birmingham (76%) and Southampton (75%).
On the other end of the scale is Belfast, where nearly half (45%) of residents do not know how to check their score.
Why your credit score matters
Your credit score is what lenders use to determine how good you are at managing money. This includes your likelihood of paying back money when you borrow it.
As John Pears, UK CEO of Lowell, says, “It’s vital that people know and understand their score, what it says about them and, importantly, the steps they can take to help improve it.”
Doing this not only increases your chances of getting approved for mortgages, loans, and credit cards but could also help you get better interest rates on your borrowing.
How to check your credit score
Have you always wanted to check your credit score but don’t know how to do it? It’s relatively simple.
Simply head to the website of a credit bureau (the four main bureaus are Experian, TransUnion, Equifax, and Crediva) and sign up for an account. You will be able to access a copy of your credit report that has all the information held by the bureau, including your credit score. This information is available for free for the first 30 days. After that, you may have to pay a monthly fee.
You can also check your score using a multi-agency credit report service such as Checkmyfile. This is a tool that checks your score at more than one bureau at the same time. You will be given a 30-day free trial period to access your report and score.
There are other free ways to check your score. For example, you can get your Experian credit report and score for free by using Clearscore. And to get a free copy of your TransUnion report and score, you can use either Lowell or Credit Karma.
Sometimes, there might be errors on your file that can negatively affect your score. That’s why it’s a good idea to check your report regularly to identify any errors and have them corrected.
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