A good credit score is important, but perhaps even more important still is understanding what impacts your credit score. Bad credit car finance provider, Go Car Credit highlights the lack of awareness among consumers about their credit profile.
YouGov‘s, the market research and data analytics firm, research shows 69 per cent of UK adults don’t know their credit score. It is near impossible to apply for services such as credit cards and loans with a bad credit score, so understanding how one works is vital, even more so during a cost-of-living crisis. Having an idea of credit can help people decide which product is best for them.
What are some of the biggest pitfalls consumers come across when applying for credit services? One of the biggest is knowing what impacts your credit score. Simply applying for a service can appear on your file. If a consumer isn’t aware of this though and applies for a loan from a variety of lenders in the hopes one accepts them, they are unlikely to have it granted.
It will appear to the lenders that the consumer relies too heavily on loans and is not managing their money correctly. This may not be true, but if the consumer doesn’t know about the impact multiple searches can have, it will appear that way to the lenders.
Improving your credit score
According to HSBC, a credit score is based on a consumer’s credit report which shows how they’ve managed past debts and bill payments. For example, if consumers have missed bills in the past then this will have a negative effect on their credit, whilst if they have paid on time then this can give a more positive score.
However, working towards good credit isn’t as daunting a task as it may initially seem. Go Car Credit highlights that reducing credit card debt, and paying all bills on time are sure-fire ways to improve it. Furthermore, disputing any errors that are on their credit report will also have an impact on their credit score.
Hayley O’Connor, marketing manager at Go Car Credit says: “Having a negative score can mean that consumers may feel like they can no longer access credit to buy things such as a car. However, we want to assure customers that whilst having bad credit can have a financial impact, it doesn’t mean that you can’t access car finance. At Go Car Credit, we look at how people would manage car finance, by assessing affordability to make sure that it’s the right loan for people who may have had adverse credit in the past.
“One of the worst things people can do when it comes to their credit is to bury their head in the sand. If people check their credit and find out that it’s not as strong as maybe they would have wished, then there are still specialist lenders who may be able to help.”