Your credit score is one of the most important numbers in your financial life. It can determine whether a lender will give you a loan or credit and the interest rate they will charge you for it.
Despite its importance, new research shows that there is a huge generational and geographic gap in understanding credit score in the UK. Here’s all you need to know.
Understanding Credit Score Across Generations
Older Britons tend to be more familiar with credit scores than the younger generation, according to a study by debt management firm Lowell.
Among 16–24 years, the percentage of those who know how to check their credit score is 55%. This rises to 66% among 25-34-years. Among 35-44 year olds, 45-54 year olds and over 55s, the figure is 68%, 72% and 72% respectively.
Here are some other related results of the study;
- One third (32%) of 16-24-one-year-olds who know how to check their credit score check it several times a month.
- Those 35-44, 25-34 and over 55 are most likely to only check their score once a month.
- People over 55 tend to have a better understanding of what affects their credit rating than younger people. For example, 72% of those over 55 know that missing payments are one of the main factors that can negatively impact their score, compared to only 35% of 16–24-years. Meanwhile, 79% of the 16–24 year olds don’t think ‘to buy now pay later‘ diets can affect their credit score.
According to Lowell, the division in understanding credit score is not only generational, it is also geographic.
For example, the UK cities that best understand how to check credit scores are Cardiff (78%), Manchester (78%), Birmingham (76%) and Southampton (75%).
At the other end of the scale is Belfast, where almost half (45%) of residents don’t know how to check their score.
Why your credit score matters
Your credit score is what lenders use to determine your ability to manage your money. This includes your likelihood of paying back money when you borrow it.
As John Pears, CEO of Lowell in the UK, says, âIt is essential that people know and understand their score, what it is saying about them and, most importantly, the steps they can take to improve it. . “
This not only increases your chances of getting approved for mortgages, loans, and credit cards, but could also help you get better interest rates on your loans.
How to check your credit score
Ever wanted to check your credit score but didn’t know how to go about it? It’s relatively straightforward.
Simply go to a credit bureau’s website (the four main bureaus are Experian, TransUnion, Equifax, and Crediva) and create an account. You will be able to access a copy of your credit report which contains all of the information held by the bureau, including your credit score. This information is available free of charge for the first 30 days. After that, you may need to pay a monthly fee.
You can also check your score using a multi-agency credit report service such as Verify my file. This is a tool that checks your score in multiple offices at the same time. You will have a 30-day free trial period to access your report and score.
There are other free ways to check your score. For example, you can get your credit report and Experian score for free using Clearscore. And to get a free copy of your TransUnion report and score, you can use either Lowell Where Credit Karma.
Sometimes there may be errors in your file that can negatively affect your score. That’s why it’s a good idea to check your report regularly to identify errors and have them corrected.
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