Do you know what a credit score means?
One in five UK adults have no idea what a credit score is despite many having been turned down for credit in the past, a new survey looking into the nation's understanding of finances has revealed.
The survey, commissioned by specialist credit card provider Vanquis, set out to gauge public understanding of what credit is, how credit has affected their lives and if they know how to improve their credit score.
Nearly one in five of respondents (19 per cent) admitted to having never checked their credit score and a similar percentage (20 per cent) confessed to having been turned down for credit.
Of those who had been denied credit, 52 per cent said that they had been rejected for a credit card and 34 per cent said they have been rejected for a personal loan. One in ten of these respondents (10 per cent) said they only realised they had a bad credit score when they got turned down for a mortgage.
When asked a series of true or false questions relating to credit, one in ten people believe that regularly checking your credit score will affect your rating and a further 10 per cent believe that your credit score will be better if you don’t borrow money, both of which are incorrect.
The survey also revealed that 80 per cent believe that you only have one credit score, when in fact people can have multiple credit scores. There are three major credit bureaus in the UK – Equifax, Experian and TransUnion – and each of these can hold different information about you depending on your financial history.
Sion O’Connor, marketing director at Vanquis, said: “It’s worrying how little understanding people have about credit ratings when they dictate a large part of our lives. Building a good credit rating is important to be able to borrow money for the important things we want in life, such a mortgage or car finance.
“We advise people to stop applying for credit until you have improved your credit score, to get on the electoral register, make sure you pay your bills on time and, in the long term, consider using a credit builder card.
“A credit builder card helps improve your creditworthiness by demonstrating that you can borrow money and meet the minimum payment each month.”
To help children learn more about finances and money management, Vanquis have created a series of easy to understand graphics. Click here.