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5 reasons to care about your credit score

From getting a phone contract to buying a home – your credit score can affect your lifestyle and future plans.

Your credit score shows lenders how reliable you are at borrowing and repaying money.

Things like missed or late payments and continuously going into your overdraft can lower your credit rating. 

Here, we look at why it’s important to look after your credit score.

1. It can affect your chances of getting a credit card or loan

Whether it’s a credit card, student loan, or car finance, you may want to borrow money at some point.

A good score can help you get approved for credit, while a bad score can stop you from getting approved. 

Gym memberships and phone contracts are also types of credit agreements. Companies like these may also run a credit check before offering you their products or services.

2. It can impact the types of deals you’re offered

To get the most competitive credit card rates, you’ll need a good credit score.

If you have a poor credit score, you may find you're offered a higher interest rate or a smaller credit limit. This means it can cost you more to borrow money, and you may be limited in the amount you can borrow.

3. Employers may be able to see your credit history

Potential employers can't see your credit score when you apply for a job (as it contains personal information). But they can see a modified credit report with your consent.

A healthy credit report can work in your favour. But if you have a history of missed payments, you may be seen as a high-risk candidate, especially if the role involves managing money.

4. It can affect your ability to rent

When renting a property, the landlord may check your credit history as part of their screening process when choosing tenants. 

After all, they’re trusting you to pay rent on time, and they’ll want to see that you’re a reliable tenant. 

5. It can affect your ability to get a mortgage

Many people hope to buy their own place one day. But did you know your credit score can affect your mortgage application?

When you apply for a mortgage, you must supply documents, such as bank statements to show lenders you can afford the repayments. However, to predict how you’ll manage the debt, they may look at your credit history too. 

If you have a poor credit score, lenders may decide you’re too much of a risk and not accept your mortgage application. 

Having a good credit score can bring you closer to owning your own home. 

How to improve your credit score

The good news is that small changes can bring your credit score up. 

Things like paying your bills on time and registering to vote can improve your score. Even checking your credit report to make sure there are no mistakes can help.