Britons’ credit scores rise during pandemic

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Pandemic-hardened Britons have seen their credit scores improve over the past two years, with many spending less, saving more and cutting debts.

According to Experian, the UK’s average credit score is on the rise from 776 in September 2019 to 797 in September this year.

This was helped by the so-called “mortgage holiday,” as well as the emergency payment freeze that allowed people to defer payments on credit cards and loans.

Know the score: People aged 31 to 35 have the lowest credit scores, according to Experian

But many people also developed new financial behaviors during the pandemic, ranging from spending less and saving more to reducing debt.

James Jones, Head of Consumer Affairs at Experian, said: “It’s encouraging to see people’s credit scores improving on average.

“While many of us have been successful in paying off existing credit using foreclosure savings, others have seen our incomes hit – but luckily some have seen our credit scores protected by payment freezes. “

Experian’s research also revealed which areas of the UK have the best and worst average credit scores.

The highest was found in the city of London (893), followed by Wokingham in Berkshire (880) and Chiltern in Buckinghamshire (879).

Average credit scores by age
age range Average score
18-20 823
21-25 792
26-30 776
31-35 770
36-40 779
41-45 792
46-50 804
51-55 819
55+ 863

Kingston-upon-Hull had the lowest average score of 702, with Blaenau Gwent and Blackpool just ahead, scoring 707 and 713 respectively.

Research also found that people aged 55 and over had the highest average score of all age groups (863), while people in their 20s had lower scores than adolescents; perhaps because they are more likely to shop on credit.

18-20 year olds had an average score of 823, falling to 792 for 21-25 year olds.

Those 31-35 had the lowest score of all, 770 on average, as they are more likely to have higher unsecured credit commitments.

After this age, credit scores usually start to rise again as wages and borrowing power increase into middle age.

Why are credit scores important?

Many Britons do not understand credit scores and their potential impact on access to financial products, TSB research shows.

In their survey, one in five people said they don’t know what a credit score is.

More than a third of people said they thought they knew what a credit score was but weren’t sure about the details, while more than two in five didn’t know their credit score.

Nearly a quarter of people have been denied credit because of a low score, according to the TSB.

The ambitions most delayed by poor credit ratings
Goal % of people delaying due to credit score concerns
To buy a house 22%
To buy a car 20%
Home renovation 14%
Buy new technology 13%
Dream vacation 12%
Start a business ten%
Career change 9%
Buy a pet 9%
Dream wedding 8%
Invest in stocks 8%
Source: Tymit

A credit score is basically a number calculated by credit reference agencies such as Experian, TransUnion, and Equifax. It effectively summarizes the information in your credit report, which details your past borrowings.

Lenders such as banks then use this information to assess whether you are financially secure enough to borrow the money and whether you will be able to repay it.

A higher credit score means lenders see you as lower risk, so you are more likely to be approved for credit and may have access to lower interest rate products.

Experian Credit Score Strips

Very poor: 0 – 560

Poor: 561 – 720

Fair: 721 – 880

Good: 881 – 960

Excellent: 961 – 999

Credit scores influence most aspects of people’s financial lives, and a bad credit score can reduce your chances of getting a financial product like a credit card, phone contract, or mortgage.

In fact, one in three Britons say worries about credit scores have put an end to their biggest goals in life, according to research from fintech credit card provider Tymit.

The most delayed goals included buying a property, buying a car, renovating a home and having a dream vacation.

Pella Frost, Director of Daily Banking Operations at TSB, said: “Your credit score impacts many aspects of daily life, but many don’t know it.

“Knowing more about it can help you be more confident about your money and it will improve your chances of accessing credit when you need it.”

How Can You Improve Your Credit Score?

There are a number of ways people can improve their credit rating.

First of all, it’s worth checking your credit report for any mistakes that could negatively impact your score. These are often easy to repair.

Examples include duplicate or incorrect accounts, an incorrectly recorded missed payment, or even a fraudulent loan taken out in your name.

Knowledge gap: New research from the TSB found many Britons do not understand credit scores and their potential impact on access to financial products

Knowledge gap: New research from the TSB found many Britons do not understand credit scores and their potential impact on access to financial products

There is also a common misconception that having no credit leads to a good credit score, when in fact having little or no credit history can make it difficult for the credit bureaus to tell you. assess, and your credit rating may be lower as a result.

You have to prove to lenders that you are a reliable borrower, which means if you don’t have a credit card yet, it may be worth getting one, as long as you pay it off every month.

But while it’s good to have some credit, too much will start to negatively affect your score. As a general rule, borrowers should avoid spending up to the limit on credit cards and make sure they make your payments on time.

Other simple tips to improve your score include never withdrawing money from your credit card and registering on the voters list at your current address.

By simply registering on the voters list at your current address, you prove where you live and who you are, and it boosts your score.

To avoid damaging your credit score, it’s also worth setting up direct debits for regular payments like a mortgage, rent, energy bills, or gym memberships.

This way you avoid forgetting a payment which can have potentially disastrous consequences for your credit score.

Ten tips to boost your score

1) Register on the list of electors at your current address

2) Use a credit card responsibly and always try to keep a good amount of credit available

3) Check your credit report regularly and ask for errors to be corrected

4) never withdraw money from your credit card

5) Limit new credit requests

6) if you have bad credit, stop asking for more

7) If you don’t have a credit card, buy one – just make sure you pay it off every month

8) don’t miss refunds

9) let your credit history mature

10) don’t keep unused cards

What about Experian Boost?

Experian is now offering people a free way to increase their credit score by a few points if they are willing to share information about the regular payments they make, which are not normally included in a credit report.

This could include housing tax, major Netflix or Amazon accounts, Apple music, or Spotify accounts, for example.

They still don’t have to spend more than they earn, and will have to allow Experian to “digitize” their main checking account with a bank or mortgage company that supports open banking.

How can people check their score?

A credit report not only details an overall credit score, but also lists your credit accounts, such as bank accounts, credit cards, utilities, and mortgages.

It will also show your refund history including late or missing payments.

There are several ways to view your rating and history for free.

Experian and Equifax offer free 30-day trials of their service online, but you’ll need to remember to cancel before the promotion ends to avoid subscription fees.

Experian will start charging £ 14.99 once the 30-day free trial ends, while Equifax will drop back to £ 7.95 per month.

Checkmyfile also offers a free trial to check your reports with Equifax and TransUnion UK – although after 30 days it starts charging £ 14.99 per month.

Alternatively, you are entitled to a free copy of your credit report every 12 months from each of the three major credit reporting agencies.

Free credit report options can also be found by visiting Credit Karma and Clearscore.

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