What credit score is good?

What credit score is good? What credit score do I need for a mortgage? What is the credit score range? This post hopes to address all these questions.

I have touched upon the credit score meaning, what a credit file is and how a credit score is calculated in previous blog posts, so please check them out to refresh your memory; however in the blog post I want to turn your attention to credit agencies.

The interchangeable term for credit agencies might be credit reference agencies or credit rating agencies uk but that is a moot point, as you are probably thinking – why should I care?

Creditworthiness

Well, when you want to approach a lender (a bank) and take out a loan or mortgage all of a sudden you might ask yourself and/or your partner: “what credit score is needed to buy a house?” – it matters!

A good score, above the national average will mean you are more creditworthy and banks are more likely to lend you money.

They base it on many factors but the 2 main things they are looking for are:

a) Is your income high enough to allow you to pay back your monthly mortgage payments?

b) Do you have other assets (car or house or business) that the banks can secure that loan against just in case you could no longer make those mortgage payments (go into arrears) and default?

Therefore, before you approach the lender it is in your best interest to look as appealing as possible to the banks.

Boost your credit score

For starters, to help you do this, I did a blog post on how to boost your credit score – start there.

Secondly, download your credit report from a credit agency to identify areas in your credit file that need addressing. By removing any issues flagged up in your credit report, this will help increase your credit score.

How do I do this?

Now, I am no credit expert (far from it!) but if you apply this knowledge I have learned from other people then at least you’ll have a better understanding than you did beforehand and knowledge is power.

Credit agencies

There are 4 main credit agencies:

1. Experian
2. Transunion
3. Equifax
4. Crediva

Why are there 4?

There are many different commercial banks (banks that deal with people like you and I) out there willing to lend people money. Different banks will go to different credit agencies to check out borrowers’ credit files.

If you are well known to one credit agency and they have a strong track record of your credit history then the lender can be in a better position to assess whether to give you money or not.

But what happens if they approach a credit agency they work closely with and that credit agency has a very limited credit file on you, the lender has no hard evidence of whether you (the borrower) can reliably pay back money on time.

Therefore, you ideally want to be “well known” to all FOUR credit agencies and have a strong record of credit history on your credit file with them.

How do I get a credit file with all 4 credit agencies?

It just so happens that I have the answer; this is where it gets juicy!

Crediva is a rather small company so for this post I am going to concentrate on the other 3 main credit agencies out there.

Experian | Transunion | Equifax – are the main credit reference agencies that most banks work with.

However, you as the borrower do not know which bank deals with which credit agency.

If you sign up with all 3 credit agencies to build a ‘rapport’, establish a credit file and history with them that will cost you a monthly fee or one-off fee if you want to download your full credit report, which will only add to your expenses.

FREE credit report

To avoid spending anything and getting a FREE credit report, each credit agency has a designated subsidiary company that gives you access to your credit file for free.

They are…

Money expert credit club – Experian

Credit karma – Transunion

Clearscore – Equifax

Voila! Sign up to these 3 companies for FREE and you can download your FREE credit report with each one to see the pitfalls in your credit history.

So to finish, I want to inspire you to take one action today after reading this blog post to add to your to do list…

TO DO LIST

1 thing I want you to do today is: go online -> sign up to credit karma uk + clearscore + money expert credit club.

Let me know how you get on!

Please subscribe to my mailing list (bottom of the page) if you want to get notified every time I release a new blog on financial life hacks that you can implement.

NEXT TIME

I will give some pointers of how to best utilise your credit report and introduce you to ‘ Check My File’ that is the saving grace if you find your credit history is a mess or you have a low credit score.

HEALTH FACT

There are 50,000 edible plants in the world and us mere mortals only consume 3: maize, barley and wheat. In order to consume more fibre (recommended daily amount is 25g for women + 30g for men) make a concerted effort to incorporate more legumes, pulses and veg into your weekly diet!

DISLAIMER

This is not financial advice and just my opinion from the knowledge I have gained from others and online resources.