Why checking your credit score regularly could save you thousands

A missed £3.99 delivery charge was all it took to derail Kelly Miles’ plans to buy a home.

Speaking to the Sun, Kelly explained how she used a buy now, pay later scheme to purchase an iPad. Although she paid off the £500 balance within the agreed six-month period, she accidentally missed the small delivery fee because it hadn’t been included in the repayment plan.

That tiny unpaid charge left a default on her credit file, and the consequences lasted for years.

When Kelly later applied for a mortgage, lenders rejected her application because of the black mark on her credit history.

Defaults can remain on your file for six years, even after the debt has been repaid, meaning she was unable to get a mortgage during that time.

The impact didn’t stop there. Kelly said her chances of being accepted for other forms of credit were also “quite low”.

The experience, which happened in 2016, changed the way she manages her finances. She now checks her credit score every month and is encouraging others to do the same.

Why your credit score matters

Your credit score plays a huge role in your financial life. As Kelly’s story shows, even a small mistake can affect your ability to get approved for mortgages, loans, credit cards and phone contracts.

And it’s not just about being accepted. A stronger credit score can also help you secure lower interest rates, potentially saving you hundreds, or even thousands, of pounds over time.

Research suggests that people with poor credit scores pay an average of £872 extra in interest every year, that’s around £73 a month.

What is a credit score?

Your credit score is a number that helps lenders decide how risky it may be to lend money to you. It’s based on your financial history and how reliably you’ve managed credit in the past.

According to Experian, on a scale of 300 to 850:

• 670 - 739 is considered a good score
• 740 and above is very good
• 800+ is considered excellent

What can hurt your credit score?

Several factors can negatively affect your score, including:

• missing or making late payments
• going over your credit limit
• applying for lots of credit in a short space of time
• frequently withdrawing cash using a credit card
• having joint accounts with someone who has poor credit
• bankruptcy, repossessions or County Court Judgments (CCJs)
• not being registered on the electoral roll
• incorrect information on your credit report
• moving house frequently in a short period

How far back does your credit history go?

Your credit history typically goes back six years. It records both positive and negative financial behaviour, including repayments made on time and missed payments.

Your report updates every month, meaning old information gradually drops off while new information is added.

Can you check your credit score for free?

Yes, and you should.

You can check your credit score for free using services such as:

• Clearscore 

• Experian 

• Credit Karma 

Regularly checking your report can help you spot problems early before they become expensive mistakes.

Why it’s worth improving your credit score

Improving your credit score can make a real difference to your finances. Benefits include:

• a better chance of being approved for mortgages, loans and credit cards
• access to lower interest rates
• potentially higher credit limits
• more financial flexibility in the future

Of course, it’s still important to only borrow what you can comfortably afford to repay.

Check your credit report for mistakes

Errors on your credit report are more common than you might think, and even small mistakes can drag your score down unfairly.

Something as simple as:

• an incorrect address
• a payment wrongly marked as late
• someone else’s information appearing on your file

could affect your chances of being approved for credit.

That’s why it’s a good idea to check your report regularly and dispute anything that looks wrong with the relevant credit reference agency.

A few minutes spent checking your file each month could save you years of financial headaches later on.