Often people don't realise just how important their credit score is, until they need it. If you would like to know why, then read on.
A credit score is determined with a credit report; they're used to show lenders just how financially secure and reliable you are.
The score range can differ, depending on which one of the four major UK Credit Bureaus you check. For example, TransUnion uses a point system from 300-850, Equifax uses a point scoring range from 0 to over 466, Experian uses a scoring system of 0-999, whilst Crediva uses a system of high to low risk as this credit report sample shows.
However, they all share one rule: the higher the number, the better your credit score is.
It is important to remember that several factors can influence how low or high your score is. For example, if you fail to pay back your bills on time by missing payments, you could suffer with a lower rating.
Missing payments can lead to serious consequences, especially if you are looking for credit in the future, such as a mortgage to purchase a new home, a loan or even a new mobile phone contract. Usually, the lower your credit score, the less likely you will be able to borrow money from a lender.
When trying to borrow money, generally the lower your credit score rating, the higher the interest on payments you will need to make. This could make it difficult to afford repayments, due to the increase in interest.
Depending on your situation, it could also take a long time to recover your credit score. For example, collections or late payments can remain on your credit report for seven years, while bankruptcies can remain for up to 10 years. As such, it's best to manage your finances in a healthy way first, if you can.
Read our article about the benefits of budgeting for more information on managing finances in a healthy way.
Please note: credit reports can be assessed by reporting agencies differently, so your credit score can vary.
If your Cabot account is on your credit file, then we will update this regularly to show when payments have been made.
Get in touch with us
If you're worried about talking to us, remember that we're here to help you to financial recovery and that we'll never ask you to pay more than you can afford. We could help you with your credit score.
Find out more about how flexible we can be, by getting in touch today. We can create a payment plan that will work best for you.
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