Jessica asks: “Hello, I would like some advice on how good/bad my credit score is for my situation and if there is anything I should do to increase it. I did a credit score check today and I am 2/5 – 561 credit score. Any information would be helpful.”

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Q&A 45 – Advice On My Credit Score – Shownotes

Today’s question comes from Jessica:

Hello, I would like some advice on how good/bad my credit score is for my situation and if there is anything I should do to increase it.

I’m a 20 year old female, living with parents. I am doing a Level 4 IT Apprenticeship and get paid around £500 a month.

I currently have a 3 Direct Debts going out (Phone Bill £43, and loans of £28 and £80 a month going out).

I did a credit score check today and I am 2/5 – 561 credit score.

Any information would be helpful.

Hi Jessica and thank you for your question.

 

 

Are You Asking The Right Question?

My first counter question would be: why does it matter? Why do you currently need an improved credit score. Is it to try and get a favourable loan (perhaps a 0% credit card to pay down the other interest bearing loans you have), or is it for a mortgage application or something similar.

If you have no need to increase your credit score, this shouldn’t be your focus. And, even if you do, it shouldn’t really be your focus anyway.

 

 

Reducing Your Bills & Loans

More pressing may be to set up a detailed budget and see where you can reduce certain expenditure. You have only given us a very small clue, but when you are earning £500 a month, spending almost 10% of it on your mobile phone contract is crazy. Check out our articles on SIM only deals to see how you could reduce that to less than £10 per month.

Then, you have over £100 of loan repayments going out each month. Given that you only earn £500, we know that these can’t be student loans. Therefore, rather than trying to improve your credit score, your focus should instead be on how you can pay these debts off, or otherwise reduce your interest burden by looking into better loan deals or 0% credit cards as an alternative option.

Once you repay your loans and get a better grip on your finances, you can then take another look at your credit score and look for ways to improve it. These can be as easy as registering to vote or paying your utility bills by direct debit. You don’t need to struggle with debt in order to get a good credit score. The only reason this myth exists is because people who make money by loaning money want to loan more money so they can…you got it…make more money.

Hope that isn’t too blunt Jessica, but I want you to take a look at your finances and try to understand that the answer to this question is irrelevant because you are not asking the right questions.

 

 

Ask Your Question

This show runs three times a week and answers all of your personal finance questions. If you have any questions, please don’t be shy to ask. You can ask in three ways:

1. Leave a comment on any of the Q&A podcast shownotes (including this one)
2. Email me at moneystepper@gmail.com
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