WEBVTT - How Much Does Your Credit Score Matter? 0:00:02.480 --> 0:00:18.920 Bloomberg Audio Studios, Podcasts, Radio News. Welcome to Meren Talk's 0:00:18.920 --> 0:00:21.640 Your Money, the personal finance edition of Merin Talks Money. 0:00:21.760 --> 0:00:24.400 In these bonus podcasts, we talk about the best strategies 0:00:24.440 --> 0:00:27.200 for making the most of your money. I'm Merrin Sumset 0:00:27.240 --> 0:00:29.720 Web and with me senior reporter and Money Distilled offer 0:00:29.840 --> 0:00:33.199 John's Effect. Hi John, Hi mel Right. This week we 0:00:33.240 --> 0:00:35.800 are tackling a topic suggested by Tala, an apprentice here 0:00:35.800 --> 0:00:37.680 at Bloomberg who's been working on our team the last 0:00:37.680 --> 0:00:40.600 few months. Tala is in her early twenties and says 0:00:40.640 --> 0:00:44.800 the surprisingly frequent topic among her friends is credit scores. 0:00:45.000 --> 0:00:47.680 I don't really have a credit history yet, how would 0:00:47.680 --> 0:00:50.720 my credit score be determined? What fuck does go into 0:00:50.760 --> 0:00:52.000 determining my credit score? 0:00:52.240 --> 0:00:54.480 And how do I even check my credit score? I've 0:00:54.480 --> 0:00:57.160 noticed that when I check my credit score on different websites, 0:00:57.320 --> 0:00:57.920 they vary. 0:00:58.640 --> 0:01:01.240 Why is that I'm a bit lost by this when 0:01:01.280 --> 0:01:03.680 I literally do not remember ever talking about credit schools 0:01:03.720 --> 0:01:04.280 in my twenties. 0:01:04.319 --> 0:01:08.560 John, No, but then we were plevileaged. Because the nineties 0:01:08.560 --> 0:01:11.360 one a much better him for young people in general. 0:01:11.400 --> 0:01:14.600 We don't have to worry about money really, because someone 0:01:14.680 --> 0:01:15.320 was so cheap. 0:01:15.720 --> 0:01:16.800 Yeah, we could buy houses. 0:01:16.880 --> 0:01:17.840 Yeah, we could buy hosts. 0:01:18.200 --> 0:01:20.400 Aside the fact that the taller and everyonends are caring 0:01:20.400 --> 0:01:22.400 about credit school maybe they're looking out mortgages. We'll talk 0:01:22.400 --> 0:01:25.319 about that later anyway. So the question is how do 0:01:25.360 --> 0:01:27.840 credit schools work? What are they? Do I have one? 0:01:27.880 --> 0:01:30.160 Do I have several? How important is it? What does 0:01:30.200 --> 0:01:32.200 it mean, what affects it the most? And how do 0:01:32.240 --> 0:01:34.720 I make it good? So lots of questions here, some 0:01:34.720 --> 0:01:36.360 of which John and I could answer alone, some of 0:01:36.360 --> 0:01:39.240 which we quite clearly couldn't. So we've bought an expert 0:01:39.280 --> 0:01:42.000 to help uts go through all the basics of this subject, 0:01:42.120 --> 0:01:46.520 John Webb. John is the senior consumer refairs manager at Experience. John, 0:01:46.600 --> 0:01:48.480 thank you so much for joining us today. 0:01:48.800 --> 0:01:49.720 Oh glad to join. 0:01:50.120 --> 0:01:53.800 So right back in the beginning, what is a credit school? 0:01:54.240 --> 0:01:57.520 There is not one credit score. So your credit score 0:01:57.800 --> 0:02:00.440 is a number that is given to you by credit 0:02:00.480 --> 0:02:03.280 reference agency like Experience, and there are others as well. 0:02:03.520 --> 0:02:06.440 Equifax and TransUnion are the other two. So there's three 0:02:06.440 --> 0:02:10.120 main credit reference agencies, and we will all give you 0:02:10.200 --> 0:02:14.160 a number and it's a summary of the performance of 0:02:14.240 --> 0:02:16.720 your credit report. So all the information that's on there, 0:02:17.000 --> 0:02:19.520 how you've managed credit in the past six years or so, 0:02:20.240 --> 0:02:23.880 and how much debt you are in, for example, right now, 0:02:23.960 --> 0:02:27.880 and the number gives you a good indication of how 0:02:28.040 --> 0:02:31.519 a lender will judge the information on your credit report 0:02:31.600 --> 0:02:33.080 when you apply for credit. 0:02:33.560 --> 0:02:36.680 Okay, so this is a number. What is a good 0:02:36.800 --> 0:02:38.720 number and what is a bad number? 0:02:39.560 --> 0:02:41.760 Well, that's an interesting question because there is not one 0:02:41.800 --> 0:02:45.440 credit score. Don't judge the numbers side by side. Each 0:02:45.440 --> 0:02:48.520 credit reference agency will give you their own experience. Is 0:02:48.520 --> 0:02:51.839 out of nine hundred and ninety nine, So we will 0:02:51.840 --> 0:02:54.880 give you a banding to say, you know, somewhere along 0:02:54.919 --> 0:02:57.840 the lines of you're somewhere in the good or very 0:02:57.880 --> 0:03:01.120 good or excellent category, for example, and your number just 0:03:01.120 --> 0:03:03.160 summarizes it gives you a really good indicator of where 0:03:03.160 --> 0:03:06.240 you sit on that banding. And you know, that's how 0:03:06.240 --> 0:03:09.280 a lender will really look at that information say okay, 0:03:09.280 --> 0:03:11.519 you know what we do. Think that's good and that's 0:03:11.520 --> 0:03:12.520 how we base that number. 0:03:12.800 --> 0:03:15.200 Okay, So you're out of nine hundred and ninety nine. 0:03:15.520 --> 0:03:18.760 Equifax and TransUnion are out of different numbers. So Eqfacts 0:03:18.760 --> 0:03:21.800 I think is out of one thousand and TransUnion it's 0:03:21.800 --> 0:03:23.800 slightly lower out of seven hundred and ten. 0:03:24.280 --> 0:03:26.679 Yeah, well, don't compare them side by side. It's good 0:03:26.680 --> 0:03:29.120 to check them all and you can do it for free, 0:03:29.320 --> 0:03:32.400 so you know, please do, but don't compare them side 0:03:32.400 --> 0:03:34.320 by side and say, right, my experience score is this? 0:03:34.400 --> 0:03:37.880 Why is my TransUnion score so low? Just view them 0:03:37.880 --> 0:03:40.400 individually and see how you sit on the banding with 0:03:40.480 --> 0:03:41.960 those credit reference agencies. 0:03:42.480 --> 0:03:46.840 Okay, And do any other organizations have credit scores for us? 0:03:46.840 --> 0:03:49.440 I mean, for example, does my bank have a credit 0:03:49.520 --> 0:03:52.840 score for me? Does my mortgage holder I have a 0:03:53.000 --> 0:03:55.440 credit score for me? Are there other numbers around the 0:03:55.440 --> 0:03:57.640 place that aren't with these three main unions? 0:03:58.320 --> 0:04:00.680 Yes? Well, just to make this, you know, even easier 0:04:00.680 --> 0:04:04.000 for you, there are different numbers, but you will not 0:04:04.160 --> 0:04:07.120 ever see those numbers. The only time the other number 0:04:07.160 --> 0:04:10.000 is generated for you is when you apply for something. 0:04:10.080 --> 0:04:13.280 So you'll apply, they will check the information on your 0:04:13.320 --> 0:04:19.720 credit report plus your application form information, so really your affordability, salary, dependents, 0:04:19.720 --> 0:04:22.200 other expenses and so on, and perhaps if you bank 0:04:22.279 --> 0:04:25.880 with them already their own information and at that point 0:04:25.920 --> 0:04:29.359 you apply, they'll generate a score for you. That's the 0:04:29.400 --> 0:04:33.119 score that determines do you get accepted or not? What's 0:04:33.160 --> 0:04:35.360 the interest rate going to be? What's the limit going 0:04:35.400 --> 0:04:37.599 to be? But they don't tell you what that number is, 0:04:37.640 --> 0:04:39.440 so you know, you'll know you were good enough if 0:04:39.480 --> 0:04:41.720 you get accepted and get the good rates, you'll know 0:04:41.800 --> 0:04:44.680 you are borderline if maybe the interest rate goes up 0:04:44.680 --> 0:04:46.000 a bit at the end, or you don't quite get 0:04:46.000 --> 0:04:46.719 the limit you want. 0:04:47.240 --> 0:04:50.360 Okay, all right, very useful, and I suppose the next 0:04:50.520 --> 0:04:53.920 obvious question to ask is how are those scores built. 0:04:54.760 --> 0:04:57.160 What goes into the building of the score. What are 0:04:57.160 --> 0:04:58.880 the agencies looking at? 0:04:59.480 --> 0:05:03.800 The score is built on lender feedback, so they tell 0:05:03.920 --> 0:05:07.960 us the credit reference agencies what's important, so you know 0:05:08.040 --> 0:05:10.560 what's important in terms of your payment history if you've 0:05:10.560 --> 0:05:12.719 made them on time, or in terms of the amount 0:05:12.720 --> 0:05:17.200 of debt you have missed payments, court judgments. There's lots 0:05:17.200 --> 0:05:20.120 of information that goes into calculating the score, but it's 0:05:20.160 --> 0:05:24.160 based primarily on how we work with and experience hundreds 0:05:24.160 --> 0:05:27.640 of lenders to figure out exactly what's important and how 0:05:27.680 --> 0:05:28.599 we build that score. 0:05:29.120 --> 0:05:30.919 Okay, so your school will be good if you have 0:05:31.080 --> 0:05:34.320 borrowed money always paid it back on time effectively. 0:05:34.760 --> 0:05:37.800 Yeah, A good track record of managing credit. So you've 0:05:38.120 --> 0:05:40.880 had some sort of credit agreements in the past, you've 0:05:40.920 --> 0:05:44.120 paid them on time, and possibly in an ideal world, 0:05:44.160 --> 0:05:46.880 you have paid them off and closed them successfully. And 0:05:46.920 --> 0:05:48.960 then that's kind of how you build your track record 0:05:49.080 --> 0:05:52.279 of managing credit well, and that leads to generally a 0:05:52.279 --> 0:05:55.400 good score. There are other things that obviously impact it, 0:05:55.480 --> 0:05:57.600 so you know not just that, but how much current 0:05:57.800 --> 0:06:00.680 debt you are in, for example, will have a big influence. 0:06:00.720 --> 0:06:03.360 If you've got credit cards, how much you're borrowing on 0:06:03.400 --> 0:06:05.120 those and how close you are to the limit and 0:06:05.160 --> 0:06:07.320 so on. So your current debt levels have a big 0:06:07.360 --> 0:06:09.840 impact on your score as well. But the history is 0:06:09.880 --> 0:06:10.719 really important. 0:06:11.040 --> 0:06:13.560 Okay, I think there's an obvious question that comes out 0:06:13.600 --> 0:06:15.720 of that. I want to ask the obvious question first 0:06:15.760 --> 0:06:17.359 and then move on to asking you what makes your 0:06:17.400 --> 0:06:20.479 credit rating bad. The first question is if you are teller, 0:06:20.600 --> 0:06:22.560 for example, you asked us this question and you're in 0:06:22.600 --> 0:06:25.279 your early twenties and you have never borrowed money before, 0:06:25.760 --> 0:06:28.159 that means you don't have a credit score at all, 0:06:28.560 --> 0:06:30.320 or it means you have a bad credit score. 0:06:30.680 --> 0:06:33.640 It's no, it doesn't necessarily mean you have a bad 0:06:33.760 --> 0:06:37.200 credit score, So they're kind of what we call a 0:06:37.279 --> 0:06:41.040 thin file, so where you just have very limited information, 0:06:41.520 --> 0:06:44.440 which means the lender can make very little judgment about 0:06:44.440 --> 0:06:47.600 how well you'll manage credit. So you know, we always 0:06:47.680 --> 0:06:51.600 kind of talk then about the process of building your 0:06:51.640 --> 0:06:54.400 credit history, and it's kind of step by step process 0:06:54.400 --> 0:06:57.440 of getting some sort of information onto your credit report, 0:06:58.160 --> 0:07:01.440 managing it well through those credits, and then building it 0:07:01.480 --> 0:07:02.000 over time. 0:07:02.520 --> 0:07:05.800 There's anything you can do to boost the law, I mean, 0:07:05.839 --> 0:07:07.520 it's something that obviously had about is make sure you're 0:07:07.640 --> 0:07:12.080 in the electoral register or the voters roll and exactly. 0:07:12.880 --> 0:07:14.520 You know, because as far as the first thing you 0:07:14.840 --> 0:07:16.600 get crear that you don't like to be going for 0:07:16.680 --> 0:07:19.200 a mortgage, I mean to having a mobile phone contract, 0:07:19.280 --> 0:07:21.120 help all of these sorts of things. 0:07:21.800 --> 0:07:24.280 Yeah, it does, actually, and it's a good point because 0:07:24.280 --> 0:07:27.320 in terms of building it, let's say, almost from scratch, 0:07:28.000 --> 0:07:30.760 getting on the electoral role is probably the first thing 0:07:30.880 --> 0:07:33.800 that I would suggest people do. So wherever they can, 0:07:33.880 --> 0:07:36.520 of course, get registered on the electoral role. That's your 0:07:36.520 --> 0:07:39.480 first bit. Your next bit is having a bank account. 0:07:39.480 --> 0:07:41.160 It doesn't matter if it's got an overdraft, but as 0:07:41.200 --> 0:07:42.920 long as you've got a bank account, it'll add some 0:07:43.000 --> 0:07:46.120 information on there, but don't have any problems with it 0:07:46.160 --> 0:07:48.360 if you can, so try not to go into unarranged 0:07:48.400 --> 0:07:50.720 borrowing and so on that can cause an issue. And 0:07:50.760 --> 0:07:53.760 then the next stage would kind of be thinking about 0:07:54.400 --> 0:07:56.880 getting a credit card. And that's because if you use 0:07:56.920 --> 0:07:59.600 that in the right way, and perhaps we'll talk about 0:07:59.600 --> 0:08:02.400 that in a moment, is they're quite easy to get 0:08:02.480 --> 0:08:03.720 and if you use them in the right way and 0:08:03.760 --> 0:08:06.480 pay them off in full, you don't pay the interest 0:08:06.560 --> 0:08:09.120 on it, and suddenly you've got a couple of accounts 0:08:09.160 --> 0:08:12.680 plus electoral role, you're building up some positive information on 0:08:12.720 --> 0:08:15.240 your credit reports. That's a great way to start that process. 0:08:15.880 --> 0:08:17.920 I think we had better go straight into what is 0:08:18.040 --> 0:08:20.080 using a credit card the right way? I mean, I 0:08:20.120 --> 0:08:22.160 think we would think using a credit card the right 0:08:22.200 --> 0:08:24.120 way is buying stuff with it, you know, of not 0:08:24.160 --> 0:08:26.720 being any interest. But you said that already. Is there 0:08:26.720 --> 0:08:28.720 something else involved in the right way? 0:08:29.280 --> 0:08:31.800 Well, it's just to do with the balance and how 0:08:31.840 --> 0:08:33.600 you use it on there. And of course this is 0:08:33.600 --> 0:08:36.560 the right way for you know, me as a credit 0:08:36.600 --> 0:08:39.320 reference agency, let's say, because what we want to see 0:08:39.360 --> 0:08:42.680 and what a lender likes to see is a very 0:08:43.120 --> 0:08:47.040 low balance but an active account. So the way to 0:08:47.080 --> 0:08:50.800 do that is spending a few pounds every month on 0:08:50.880 --> 0:08:53.400 something you would have bought anyway. So try not to 0:08:53.400 --> 0:08:56.040 buy something that you wouldn't have wanted to buy normally. 0:08:56.360 --> 0:08:59.360 That's how you kind of get into problems. But spend 0:08:59.360 --> 0:09:02.520 it on something the food shop once a month, something 0:09:02.600 --> 0:09:05.800 like that, pay it off in full every month, so 0:09:05.880 --> 0:09:07.839 you don't pay the interest on it. And so if 0:09:07.840 --> 0:09:10.640 you keep the balance slow, you keep it active, you 0:09:10.679 --> 0:09:12.960 don't pay the interest. That's a great way to keep 0:09:13.000 --> 0:09:17.400 your credit card running. Of course, there are people who 0:09:17.480 --> 0:09:20.480 use credit cards to do their normal spend on that's 0:09:20.480 --> 0:09:23.640 because they might get rewards points things like that on it, 0:09:23.679 --> 0:09:27.560 and there's nothing wrong with that. But if you're spending 0:09:27.600 --> 0:09:29.640 a large amount or getting very close to the limit 0:09:29.720 --> 0:09:32.600 every month, then that can show on your credit report 0:09:32.600 --> 0:09:34.959 and that could affect your credit score. So you probably 0:09:34.960 --> 0:09:37.880 want to avoid that right before you apply for something important. 0:09:38.559 --> 0:09:41.320 That's interesting because this is another thing of read about, 0:09:41.440 --> 0:09:44.560 this idea of not wanting to do too many things, 0:09:44.600 --> 0:09:47.280 Like if you go to the personal finance websites, then 0:09:47.320 --> 0:09:49.840 people often talk about who you apply for the new 0:09:49.880 --> 0:09:52.559 buying account so you can get the sweach in bonuses 0:09:52.600 --> 0:09:54.839 every six months or something like that. But then they 0:09:54.840 --> 0:09:57.000 sort of say they don't do that. If you're about 0:09:57.040 --> 0:09:59.839 to apply for either a mortgage or a personal loan, 0:10:00.040 --> 0:10:01.960 the big condity, can you give us an idea of 0:10:01.960 --> 0:10:03.520 what the kind of lee we as and that sort 0:10:03.559 --> 0:10:05.560 of stuff? Is there any sort of gay is there's 0:10:05.720 --> 0:10:08.280 a less less of a big deal and what's more 0:10:08.360 --> 0:10:09.320 important to avoid? 0:10:09.920 --> 0:10:14.079 Yeah, so there's lots to that question. But the first 0:10:14.120 --> 0:10:17.360 part is we generally say, because when you apply for credit, 0:10:17.400 --> 0:10:19.440 it pops up on your credit report and it could 0:10:19.720 --> 0:10:22.240 lower your credit score, and so we say keep those 0:10:22.280 --> 0:10:26.080 two a minimum where you can. So probably a couple 0:10:26.280 --> 0:10:30.320 every few months is a good idea. And so you know, 0:10:30.360 --> 0:10:33.000 that's why we say probably a couple of months, two 0:10:33.040 --> 0:10:35.679 three months before you apply for something bigger like the mortgage, 0:10:35.720 --> 0:10:38.440 for example, you want to avoid applying for other types 0:10:38.480 --> 0:10:41.120 of credit just so you don't have those applications pop on. 0:10:41.920 --> 0:10:43.959 But the other part to your question is if you're 0:10:43.960 --> 0:10:48.360 applying for something that you know has a value to it. 0:10:48.440 --> 0:10:52.240 So let's say you're taking out a loan or potentially 0:10:52.280 --> 0:10:54.360 even using buy now Pay later, or something that would 0:10:54.360 --> 0:10:57.760 add a balance of debt to your credit report. You 0:10:57.960 --> 0:11:02.679 again might want to avoid that before applying for something big, 0:11:02.800 --> 0:11:05.640 just because of that will then impact into your affordability 0:11:05.720 --> 0:11:07.960 how much you're currently borrowing those kinds of things. 0:11:08.600 --> 0:11:11.440 Yeah, one quick thing that you mentioned by an ope later, 0:11:12.000 --> 0:11:14.040 what is this theatis of that at the moment? And 0:11:14.120 --> 0:11:17.360 because I've not stayed fully abreast of this, and I 0:11:17.400 --> 0:11:21.000 remember the sort of clown that stale stuff wasn't really 0:11:21.040 --> 0:11:24.360 been clipt an eye And how's that change in or 0:11:24.400 --> 0:11:25.280 what's going on with that? 0:11:26.160 --> 0:11:28.839 Yeah, that's an interesting question. But that there are by 0:11:28.920 --> 0:11:32.960 now pay later lenders who are sharing with credit reference agencies, 0:11:33.040 --> 0:11:36.000 now Klana being one of them. They share their information 0:11:36.360 --> 0:11:38.640 with us, and some of the others do with the 0:11:38.640 --> 0:11:42.320 other credit reference agencies as well. It doesn't factor into 0:11:42.679 --> 0:11:45.319 the credit score we give you yet because the sharing 0:11:45.440 --> 0:11:49.040 is so new, and there is regulation that is kind 0:11:49.080 --> 0:11:51.680 of proposed and coming down the line, which may mean 0:11:51.960 --> 0:11:56.000 that possibly next year twenty twenty six, they will be 0:11:56.040 --> 0:11:59.600 regulated to share or by now pay later accounts with 0:11:59.679 --> 0:12:02.160 credit reference agencies, So that might come down the line. 0:12:02.200 --> 0:12:03.760 But it may be that if you use certain ones 0:12:03.800 --> 0:12:05.920 they will share with a credit reference agency at the moment, 0:12:05.960 --> 0:12:08.320 so you'll see those accounts pop onto your credit report. 0:12:09.040 --> 0:12:11.720 So let's talk about what makes your credit reading bad. 0:12:12.000 --> 0:12:14.360 What are the things that actively make it bad? I mean, 0:12:14.400 --> 0:12:17.080 I'm assuming things like coming account of good judgment against you, 0:12:17.400 --> 0:12:21.400 a bankruptcy and iva, that kind of thing. But is 0:12:21.679 --> 0:12:24.240 there anything else that will actively make it bad that 0:12:24.320 --> 0:12:26.599 might not be immediately obvious to people like that. 0:12:27.160 --> 0:12:28.880 Yeah, of course, so these obviously are the things to 0:12:28.920 --> 0:12:33.360 try and avoid where possible. We've talked about applying for credits, 0:12:33.400 --> 0:12:35.600 so you know, lots of applications in a short space 0:12:35.600 --> 0:12:40.079 of time, that's likely to drop your credit score if 0:12:40.080 --> 0:12:42.679 you've got lots of new accounts as well, so we 0:12:43.280 --> 0:12:45.640 calculate the average age of your accounts. So really what 0:12:45.679 --> 0:12:49.840 we're saying is long running accounts are good. Loads of 0:12:49.920 --> 0:12:53.840 new accounts can kind of impact your credit score quite significantly, 0:12:53.920 --> 0:12:57.160 especially if they're under a year old. And then the 0:12:57.200 --> 0:12:59.719 next part is payment history. It's a really big part 0:12:59.720 --> 0:13:03.400 of your score, so missed payments, even one of them, 0:13:03.679 --> 0:13:06.280 could impact your credit score by quite a lot. So 0:13:06.480 --> 0:13:08.719 you know, really important to have the direct debits set up, 0:13:09.160 --> 0:13:11.640 make sure things are paid on time, even the mobile 0:13:11.679 --> 0:13:14.720 phone contract, you know, the smaller bills that you think, actually, 0:13:14.760 --> 0:13:16.120 you know what, that's not going to have much of 0:13:16.120 --> 0:13:19.160 an impact. It will still impact your credit report if 0:13:19.160 --> 0:13:19.600 you miss it. 0:13:19.880 --> 0:13:22.520 Does that include your electricity bill and your water bill 0:13:22.600 --> 0:13:23.439 and all that sort of thing. 0:13:23.880 --> 0:13:26.960 Yes, they are shared with credit reference agencies as well, 0:13:27.040 --> 0:13:29.400 so you know, if you're missing those payments and also 0:13:29.480 --> 0:13:32.600 incurring debt for missing those payments, yes, that will show 0:13:32.679 --> 0:13:35.080 on the credit report as well. You talked about county 0:13:35.080 --> 0:13:38.640 court judgments, so court judgments, anything to do with insolvency 0:13:38.679 --> 0:13:42.120 like an IVA or bankruptcy will obviously have a significant 0:13:42.120 --> 0:13:45.280 impact on your credit score. But the biggest thing that 0:13:45.559 --> 0:13:48.040 actually does have an impact on your score is what 0:13:48.040 --> 0:13:51.160 we call a defaulted account. So that's an account where 0:13:51.200 --> 0:13:54.960 you haven't paid it in probably somewhere around three to 0:13:55.120 --> 0:13:58.880 six months, and the lender has then closed the account 0:13:58.960 --> 0:14:02.280 with an outstanding set as a default stays on your 0:14:02.280 --> 0:14:05.360 report for six years from that point, and that has 0:14:05.400 --> 0:14:07.640 a really big impact on getting credit. So, you know, 0:14:07.720 --> 0:14:11.600 my biggest advice actually in that scenario is if you're 0:14:11.640 --> 0:14:14.800 missing payments or you're going to miss payments and you're 0:14:14.800 --> 0:14:17.720 in that place where you will go on the road 0:14:17.800 --> 0:14:21.240 to potentially a default is speak to the lender straight away, 0:14:21.320 --> 0:14:24.360 try and set some sort of payment arrangement up that 0:14:24.480 --> 0:14:26.880 at least stops it going to a default. Or as 0:14:26.880 --> 0:14:29.280 well as that, speak to a free debt advice provider, 0:14:29.360 --> 0:14:32.040 your step change pay plan, someone like that who can 0:14:32.080 --> 0:14:35.040 really help sort out you know, your kind of finances 0:14:35.080 --> 0:14:36.880 and budget and so on, and find the right solution 0:14:36.960 --> 0:14:37.200 for you. 0:14:37.880 --> 0:14:41.040 Let's say I'm playing for a mortgage and my credit 0:14:41.200 --> 0:14:44.480 score with experience with all of them is not excellent 0:14:44.640 --> 0:14:48.520 but very good. What's the difference in the interest rate 0:14:48.560 --> 0:14:50.800 that I'm likely to get offered for a mortgage? 0:14:50.960 --> 0:14:53.360 That's a that's a very difficult question to answer, so well, 0:14:53.440 --> 0:14:55.520 let's don't focus on that too much. And the reason 0:14:55.560 --> 0:14:58.160 I say that is, like I explained earlier, what happens 0:14:58.240 --> 0:15:00.840 is the lender doesn't see the score we give you. 0:15:00.880 --> 0:15:03.640 They see the information on the credit report, but they 0:15:03.760 --> 0:15:07.960 use that in conjunction with that your affordability information. So 0:15:08.040 --> 0:15:10.200 you might have a huge deposit. I'm sure you've been 0:15:10.200 --> 0:15:12.720 saving for a long time, so you've got that. Your 0:15:12.840 --> 0:15:17.280 salary is great, your other expenses are minimal, and that 0:15:17.400 --> 0:15:20.480 you know, together they calculate that and give you their 0:15:20.520 --> 0:15:22.560 own score, and that might mean that you get, you know, 0:15:23.000 --> 0:15:27.040 a very very good interest rate. If there is an 0:15:27.040 --> 0:15:31.080 issue with affordability or with negative information on your credit report, 0:15:31.160 --> 0:15:33.280 that's where you might start to see the interest rate 0:15:33.520 --> 0:15:36.680 is getting a little bit higher when you apply. But 0:15:36.800 --> 0:15:39.280 that's down to each individual lender, how they judge it, 0:15:39.440 --> 0:15:42.520 how they you know, assess that score, and you know 0:15:42.600 --> 0:15:44.720 what rate they give you. At the end, you're. 0:15:44.600 --> 0:15:46.600 Saying that there may be no difference between the interest 0:15:46.640 --> 0:15:49.800 rate I'm offered if I'm very good or excellence. Are 0:15:49.960 --> 0:15:51.880 so subjective, isn't it? 0:15:51.880 --> 0:15:57.160 It's well, I wouldn't say subjective because it's slightly so 0:15:57.200 --> 0:15:59.480 I guess it's scientific in the sense that you know, 0:15:59.520 --> 0:16:01.640 there's just it's a lot of data to look at 0:16:01.760 --> 0:16:05.600 and judge, but each lender will be slightly different in 0:16:05.680 --> 0:16:07.840 how they assess it. So I don't want people to 0:16:07.840 --> 0:16:10.800 get hung up on the fact that they're twelve points 0:16:10.840 --> 0:16:13.360 away from being in the excellent category, because that will 0:16:13.400 --> 0:16:16.920 have very minimal impact on, you know, how the lender 0:16:17.000 --> 0:16:20.440 judges the information. It's really about making sure your credit 0:16:20.440 --> 0:16:23.240 reports in a good place and then obviously they factor 0:16:23.280 --> 0:16:25.000 in the other information as well. 0:16:25.640 --> 0:16:27.480 Yeah, it's a bit late for that, John Binnis, because 0:16:27.480 --> 0:16:29.960 we had target driven people and John and now the 0:16:30.000 --> 0:16:32.280 second we finish here will be going online and we'll 0:16:32.320 --> 0:16:33.800 be trying to find out what our score is at 0:16:33.800 --> 0:16:35.720 each one if where it doesn't matter how far up 0:16:35.760 --> 0:16:37.720 we are off Eklanent, We're both going for it and 0:16:37.720 --> 0:16:39.360 it will be a competition. I'm going to be age 0:16:39.680 --> 0:16:43.920 long before right now. Well, absolutely absolutely, he's already. I 0:16:43.920 --> 0:16:45.720 don't know. We'll be finding out in the next ten minutes. 0:16:46.160 --> 0:16:48.240 And the all other thing I wanted to Johin was see, 0:16:48.280 --> 0:16:51.920 if you do have buyed credit, how do you repeal that? 0:16:52.080 --> 0:16:55.080 Like say, if i'd I don't know, a dodgy kind 0:16:55.120 --> 0:16:57.400 of like yeah, you know in the twenties, but no, 0:16:57.520 --> 0:17:00.800 you're a responsible adults. Should you start with? 0:17:01.560 --> 0:17:04.239 Well, look, the good news I'd start with is that 0:17:04.400 --> 0:17:07.520 generally information on your report stays for six years, so 0:17:07.560 --> 0:17:09.560 there's always light at the end of the tunnel. If 0:17:09.560 --> 0:17:12.720 there's something negative, the thing I would say is key 0:17:12.960 --> 0:17:14.879 is just keeping on tracks. So you might have some 0:17:14.960 --> 0:17:19.000 negative stuff, it's about okay, can that negative stuff be 0:17:19.080 --> 0:17:21.800 brought up to date? If you've been missing payments and 0:17:21.880 --> 0:17:24.600 kind of turn that into a positive, keep that running well, 0:17:25.280 --> 0:17:27.800 and depending on what it is, it might mean that 0:17:27.880 --> 0:17:31.040 you focus on other accounts. So those basics that we 0:17:31.080 --> 0:17:33.359 talked about earlier, you know, having the bank account, maybe 0:17:33.400 --> 0:17:37.199 having the credit card, and just focusing on those and 0:17:37.280 --> 0:17:40.960 keeping them running well, on time, paid, on time, balance 0:17:41.040 --> 0:17:44.320 is low, and then at some point the other negative 0:17:44.320 --> 0:17:46.360 information might drop off the report and it has less 0:17:46.359 --> 0:17:49.280 of a negative impact on your score over time. So 0:17:49.320 --> 0:17:52.040 it's kind of just focusing on doing good things while 0:17:52.080 --> 0:17:54.280 you can and with what you can, and then it 0:17:54.320 --> 0:17:57.199 will start to improve over time. The other thing I 0:17:57.200 --> 0:17:58.679 would say, as well, as you know kind of when 0:17:58.720 --> 0:18:01.200 we're talking about the negative bit well and the applying 0:18:01.240 --> 0:18:04.280 for credit process is actually there are lots of services 0:18:04.720 --> 0:18:09.640 available to search for credits or primarily credit cards, loans, 0:18:09.960 --> 0:18:13.240 car finance, and in a way for mortgages as well. 0:18:13.320 --> 0:18:18.560 But use comparison sites and eligibility services to check for 0:18:18.640 --> 0:18:21.120 credits or we've got one. There are lots of them 0:18:21.160 --> 0:18:24.160 out there, and the reason you use those is they 0:18:24.160 --> 0:18:26.200 don't impact your credit score when you do the search. 0:18:26.200 --> 0:18:29.280 It's a bit like searching for house insurance online. Their 0:18:29.440 --> 0:18:32.040 soft searches don't impact your credit score, but they will 0:18:32.080 --> 0:18:35.160 give you a very good idea of who will accept 0:18:35.200 --> 0:18:37.240 you and what kind of deals you can get. And 0:18:37.280 --> 0:18:39.800 you could even get pre approved as well, which is 0:18:39.800 --> 0:18:43.679 always a delight to know before you actually apply, so 0:18:43.960 --> 0:18:46.359 you know if anyone does, if anyone's looking for credit, 0:18:46.400 --> 0:18:48.919 even if they're in a good place or they have 0:18:49.040 --> 0:18:51.520 negative information, it's a great place to do your kind 0:18:51.520 --> 0:18:53.600 of credit research. I know you said about ADMIN earlier. 0:18:53.600 --> 0:18:56.040 It's more ADMIN, but it means that you know, you 0:18:56.080 --> 0:18:58.000 get a really good idea of who you should approach, 0:18:58.080 --> 0:19:00.320 rather than just applying to anyone who you've seen and 0:19:00.720 --> 0:19:01.840 possibly getting refused. 0:19:02.240 --> 0:19:04.760 If I can look up my credit score this easily, 0:19:05.640 --> 0:19:07.600 can other people look at my credit score? 0:19:08.280 --> 0:19:08.440 No? 0:19:08.720 --> 0:19:09.080 Why not? 0:19:09.840 --> 0:19:12.840 So when you say open an account with a credit 0:19:12.840 --> 0:19:15.320