Why You Need A Good Credit Score
What with increases in living standards and costs of raising children making recent news headlines, never having ‘enough’ money is something that isn't far from most of our minds.
Some of us find saving money almost impossible, while others struggle with paying off bills and debts that they currently have.
Being able to gauge when we can buy something on credit — and when we cannot — is a particular form of awareness that needs cultivating and monitoring your credit score is one way to go about it.
What are credit scores?
Credit scores are 3-digit figures that indicate how trustworthy — or should we say, creditworthy — you are when it comes to making debt repayments.
The higher your credit score is the less of a risk you are likely to be, that is, the more creditworthy you are likely to be, in the eyes of lenders.
Why you need to have a good credit score
Whether it is to fund a course that you intend to study at a college or university, or invest in some much-needed home improvements, or any other reason that is making you consider applying for a loan, you can be better prepared by finding out what your credit score is.
Why? Well, lenders use credit scores as one of the ways to gauge how creditworthy you are likely to be while considering the loan applications they receive.
If you were to know your credit score before putting your application in, you can gauge the chances of your application being successful.
So, if you were to find that your credit score is on the lower end, you can take steps to improve it before you even apply for a loan.
The same applies for when you wish to take out a mortgage to help you get on to the property ladder — or the next rung; to use a credit card for emergency purchases or to simply help you build a better credit score.
Can my credit score protect me from online fraud?
Some credit score providers have a fraud management service, where customers are sent text or email alerts on any changes happening to their credit scores.
This especially works when you are making credit repayments on time and in full, but suddenly get alerted that your credit score has been negatively impacted. This may mean that you have been a victim of online fraud, as someone is using your credit card and/or identity details for their own personal financial gain.
So, changes to your credit score can help you alert you about potential fraudulent incidents.
How do I find out what my credit score is?
You can either request for your credit file to be sent to you for a cost of £2 from any of the three main credit reference agencies: Experian, Equifax and Callcredit, or you could sign up to a monthly subscription service to help you keep tabs on your credit score.
These services, such as My Credit Monitor usually come with a free 30-day trial before they start charging you.
