Welcome to our freshest series Fincheck reader! In this series, we're tackling the credit health topic, helping you understand all things credit! You can look forward to learning more about credit scores, reports, improving your credit health and the factors that influence your credit health.
In our previous posts, we've talked about:
- your credit score, why it matters and;
- your credit report and where all this information comes from
- how to manage and improve your score
In this post, we're looking at common misconceptions and questions people have about their credit scores.
At the end of this post, we'll share a tool with you to help you get very own FREE credit score. Let's get started.
Why is my credit score low if I have huge savings and no debt?
This is probably one of the most common misunderstandings when it comes to your credit score. It's a slightly counter-intuitive fact, but no debt and a lot of savings do not mean you have a good credit record!
Your score is a reflection of how well you manage your accounts and your credit risk profile. Your score might be low due to the fact that you haven't used any credit for a while, so there will not be any information to show that you have a good history of paying off credit.
This is one of the main factors that lenders use to calculate your credit score. Assets, such as your savings, do not have an impact on your credit score. In actual fact, the Data Protection Act means that a Credit Reference Agency is not allowed to hold this data.
My credit score is lower than I expected. Why is this?
Many reasons could influence your credit score and reduce it lower than you thought it would be. These reasons could be:
- A credit history of fewer than 6 years, which is the timeframe used to calculate your total credit score. (A shorter credit history means that the lender has less information to base their score on).
- Missed or late payments over the last 6 years.
- Holding very few credit accounts means there will be less credit history available on your profile.
- Court Judgements or record of insolvency.
- Having a lot of un-used credit available could lead to a large balance of debt if you decided to use it all at once.
- Balances on your accounts that are very close to the credit limit indicate that you rely on credit to get through each month.
If I have missed a payment or made a late payment on my accounts, will this show on my credit report?
Yes, it will if it was within the last six years. This is due to the fact that your credit profile includes 6 years’ worth of payment history. Late payments will cause a negative impact on your credit score.
Does checking my own credit report have a negative effect on my credit score?
No, checking your own credit report does not have a negative impact on your credit score.
How can you get your credit score?
Fincheck always aims to help people make better financial decisions. We have spent a lot of time and effort in building a tool to help you do all of the above. You can sign up for the MyFincheck Credit Score Tool and get your FREE score directly here. Or, if you want to learn more about the tool, you can read about the features here.
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To your better financial future!