If you want to make a big purchase, get a mortgage to buy a house or apply for a credit card in the UK – you’ll hear lots about your credit score. So what is it and why should you worry about your credit score?


‍You can read more about what a credit score is in our blog. But in short, your credit score is a way for you to see how lenders view you based on how well you have previously borrowed and repaid money. Your credit score is based on your credit report, which lenders use to decide whether they’ll accept you for credit and at what repayment rate. So it’s important, right?


Well, yes. But your credit score isn’t actually what lenders will look at. The credit score itself is a number that’s a reference for you, not them.


The lender will use information in your credit report – which contains details of your credit history, as well as information like your address and people you hold joint accounts with – to make their decisions. They may also want to see your income and expenses too, which aren’t on your credit report.


‍The truth is, every lender uses their own system to make their decisions. There’s also no universal credit score across the three main credit reference agencies (CRAs): Experian, Equifax and TransUnion. Your credit score with one is different to others.


So, you might be thinking: “Should I bother worrying about my credit score?”

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Why should I worry about my credit score?

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If your credit score is higher, you’re more likely to get a good deal on a credit card, loan or mortgage. But there’s no automatic number that will guarantee you’re accepted for a credit application.


Maybe you have an “excellent” rating but you’re in between jobs. With no income on your bank statements for three months, you might not be offered a loan. Nothing to do with your credit score! You can read more about what credit score you need to get a loan here.


‍At Loqbox, we don’t want you to worry about money. We’re here to help you understand and improve your finances. So, let’s be more positive! Instead of asking whether you should WORRY about your credit score, let’s look at why you should CARE about it.

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5 reasons to care (not worry!) about your credit score:

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1. Your credit score could affect your credit card and loan applications

Your credit score won’t be the only reason you do, or don’t, get accepted for a credit card or a loan. But it is a good indicator of how likely you are to be accepted.


If you can show lenders that you are responsible with your money, you will be seen as lower risk. If you know your credit score is in good shape that’s one less thing to worry about, right?

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2. Your credit score reflects what interest rates you could get

It is possible to be accepted for a credit card, mortgage or personal loan if you have a bad credit score, or even without any credit history at all.


But as a guide, the lower your credit score is, the more likely you’ll be offered credit with an expensive interest rate.  In the long term, lower interest rates could save you £1,000s!

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3. Some employers will check your credit report

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It won’t happen for every job application. But it is becoming more popular, especially in financial jobs where you will be given access to large sums of money or personal data.


Employers can check your credit report to see how reliable you are with money. They aren’t able to get a detailed report with all of your personal information, but they can see certain details like if you’ve ever had a default, CCJ or bankruptcy.

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4. Your credit history can affect rental agreements

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To a landlord, how well you repaid a loan tells them how likely you are to pay your rent in full and on time. A healthy credit score will give them more confidence in you and will improve your chances of getting the green light to move in!

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5. Your credit report can affect your mortgage application

Just as with a loan and a credit card application, when you apply for a mortgage the lender will run a hard credit check on you.


Although it isn’t the only thing they will look at, your credit history will give them an indication of how likely you will be able to manage the mortgage repayments every month. Your previous credit history will have an impact on whether they agree to lend to you and at what rate.

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OK, so how do I care for my credit score?

It’s not as hard as you might think! With a bit of patience you’ll find that the little things make a big difference.


At Loqbox, we love to help you feel more at home with your money and to build your credit at the same time. So here are few things you can do right now to start:

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• Activate Loqbox Grow — we make sure your weekly £2.50 membership payments are reported to Equifax, Experian and TransUnion to help boost your credit score. You could boost your score by 125 points on average in the next six months.
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• Set your savings goals with Loqbox Save from as little as £20 a month. We’ll help you to start growing your credit score by reporting your monthly savings to the UK’s three main credit reference agencies.
  
  

• Make your rent count! Securely connect your bank account using Loqbox Rent – let us know when your rent comes out and how much you pay. Then we’ll report your rent payments to build your credit history.

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