Managing credit badly – for example not making your payments, or making late payments – will show up on your credit history.
And your credit history doesn’t just affect whether you’ll be able to borrow again in the future, it can also stop you from doing some pretty major everyday things too.
Recent research* carried out for us found that some six million Brits have been excluded from some aspects of day-to-day life because of how they’ve used credit in the past. Here are six things that could be affected by your credit score, and a couple of them may surprise you:
1) Mobile phone contract – when you apply for a mobile phone contract, the provider runs a credit check on you. If they see you’ve had problems with late payments or defaults, they may well turn you down.
2) Bank account – you are likely to be credit checked when you apply for a current account with a bank or building society and you could be rejected if your credit report isn’t up to scratch.
3) Jobs – some employers may credit check you when you apply for a job and it can mean the difference between securing the position or not. This won’t happen for all jobs but if you’re looking at a role where you’ll have to handle money, it’s a possibility.
4) Car insurance – if you’re looking to insure your car, you can be credit checked for this too. This is because when you pay for your insurance monthly by direct debit, the insurer is essentially lending you the money and letting you repay it over the year.
5) Rental agreement – you probably already know that a bad credit record could stop you getting a mortgage, but did you know it could affect where you’re able to rent too? Landlords may want to check whether you’re likely to make your payments or not.
6) Utility bills – your energy supplier can also check your credit score and if you’ve got a history of not paying your bills, this could create problems for you. They may require a security deposit or put you on a pre-payment meter, which can work out more expensive than paying by monthly direct debit.
If you’re in doubt whether your credit record will cause you problems, check it at one of the main credit reference agencies: Experian, Equifax, or Callcredit. You should do this at least once a year so you’ll be able to see if anything has changed.
Don’t panic if you do find some problems on your credit report – they’ll be removed after 6 years and in that time you could try to improve your credit score. For example, a credit builder credit card, like the one available from Ocean, can help you demonstrate that you can use credit responsibly – if you put small amounts on the card it and repay on time every month, this could boost your credit score. But you need to take care, as failure to make the minimum payment on time or stay within your credit limit could harm your credit rating. You can find out more here.
*OnePoll questioned a nationally representative sample of 2,000 adults aged 18 and over between 11th February and 23rd February 2015, of whom 635 were in Scotland. Figures have been extrapolated to fit ONS 2013 population projections of 50,371,000 UK adults.
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