For every ten adults in the UK, at least four lack a credit history, and a further two thirds of British consumers have no idea of their credit score. The effect of credit invisibility to this group can be very profound. Among the various investment tips for beginners, having a good credit score ranks high on the list.
At least one in every five Brits reported being denied cash loans due to lack of a credit score or due to a bad credit score. This is according to a survey conducted by MYJAR, an online lender. This study further reported that at least one in every twenty has at some point been rejected for mortgage application and mobile phone contract. Due to the gap in gender pay and not having credit cards in their names, the average credit score for women is generally low. While that of men is at 345, theirs is at 330 as indicated by Clear score. This bears a limiting factor to women who might need loans for business or personal use. It is indisputable that a good and accurate credit score increases your ability to purchase a car, house, appliances and access loans. It is thus important to run health checks on your credit reports.
Loan Approval By Lenders
Purchase of some ticket items can be very expensive at times. You might need a loan to afford it. Different types of lenders are available for this reason. However, no lender will give loans to just anybody. In recent years, they have become more picky and strict with the people they loan. This is since the 2008 economic recession that hit hard the lending offices and banks especially. Among the things lenders look for before approving your loan is your credit score. A poor credit score or no credit score might just deny you the opportunity to purchase your much desired ticket item while a good credit score will guarantee you the same.
Price of Interest Rate
Apart from qualifying you for a loan, a perfect credit score will similarly influence the price of interest you are eligible to. In UK with a credit score of about 700 and above, you can rest assured of a friendly interest rate on your credit card or loan. Consequently, a bad or no credit history will subject you to rates above the standard interest rates on credit cards. Various lenders might even charge more than 25 percent interest. Low interest rates actually make it even easy for you to pay up your loan.
Buying A Home
It is common for any home buying or mortgage lenders across UK to check your credit score before they can lend you money to buy a home. Most of them will settle for a score not less than 640. With a bad credit score, they will definitely take you for a financially challenged person. No one will want to do business with you especially for a house loan going for up to 30 years. The housing market drastically went down a few years back leading to closure of many homes. Since then, the real estate housing finance institutions have become more cautious. A good credit score always gives them confidence to do business with you. It gives them assurance that you will pay up with no hustle.
In the near future, your credit score will determine what you will be required to pay for when it comes to insurance. Either homeowner’s insurance, auto or even health insurance. Furthermore, one’s credit score might also be used to determine the loss posed by the consumer as well as the number of claims. It is thus important to work on a good credit score.It all begins with getting a credit report and gauging where you stand.