Since getting into debt, and clearing it all off again, I have been somewhat obsessed with my credit score. Whilst I know that a credit score is important, and can affect a lot of things, I have decided to not check it for a few months.
Over the past few years I have had a lot of ups and mainly downs with money. Every time I got turned down for credit or even a bank account, I felt like a failure and completely stupid. I was out of debt but at what cost? It was overwhelming and heartbreaking. It has been a long and stressful road, and keeping an eye on my credit score has only made it more stressful. The smallest thing can affect it and it became an obsession.
I’ve done a good job of rebuilding my credit. I now have a “proper” current account again. I also have a credit card which isn’t just for people with poor credit. I took out a small loan last year, and this year I got a car on finance. Unfortunately my credit score is currently lower than it has been for a couple of years. After I got my car it dropped about 100 points. It hadn’t clicked that the car finance it hadn’t shown on my previous month’s credit score and therefore I had a complete moment of panic when I saw it.
What’s the issue?
I have a credit card, a bank account and a car, so what was the issue? Well, I am considering moving house this year. Although my plan is to be mortgage free, depending on how much my lease extension costs as well as the other costs involved with moving, I may need to get a small mortgage. Whilst I do currently have a mortgage, by moving it to another property, the lender will treat it as a new application and therefore there is no guarantee I would get one. I may yet decide to downsize massively and be mortgage free, but I wanted to know my options before deciding on a property that I was never going to be able to afford.
I contacted a mortgage broker who was recommended to me by a relative. They requested that I get my statutory credit report for £2 and once he had that he would be able to advise.
Whilst my credit score is the lowest it has been for a very long time, he has reviewed my report and is quietly confident that I will be ok. We’ve agreed I will do nothing that will affect my credit score (from insurance searches to applying for more credit) until I am ready to move and apply for an agreement in principle. Hopefully by then it will have settled down (those comparison sites do so many searches that my new car seemed to have filled up several pages of my report). Whilst he cannot guarantee that I will get a mortgage, by getting the car on finance, he is more confident than he was before – after all, people are lending to me! Also, he assures me that mortgage companies look at different criteria, and also as mortgages are secured loans they are treated very differently.
In short, the one thing I might need in the forseeable future, won’t be judged on my credit score alone. This is why I have decided to stop checking it.
What about me?
Credit scores are on the whole far more complicated than just a number. There is a lot more to it, and far more than I could explain. One of my favourite resources on this is from Martin over at Moneysavingexpert. In that particular post, he busts 10 credit myths, as well as telling how your credit score can affect things from mortgages to mobile phones. He also shares some really good tips on how to build your credit score.
I appreciate that being out of debt and having started the rebuilding of my credit, you might think it’s easy for me to say that I won’t check my credit score. I have been in debt and I have obsessed over the numbers though and I know how that feels. Whatever your financial position, that is what I don’t want you to do. If you feel like you are getting hooked on that number, take a few months off from checking. I’m not saying take a few months off from trying to rebuild it, far from it – keep chipping away at it. Following those top credit rebuilding tips are great ways to work on it and put good financial principles in place for yourself, I’m just saying try not to obsess about the damn number!