TSB research reveals confusion around credit scores
A recent study by TSB has shed light on the misunderstandings and misconceptions surrounding credit scores among UK consumers. The study found that a mere 46% of Britons fully understand what a credit score is, while a staggering 41% are unaware of their own score. The research also highlighted several misconceptions around checking credit ratings, with 18% believing that checking scores frequently can negatively impact them.
Lack of understanding impacting financial lives
The TSB research further showed that a significant number of people are unsure about the details of credit scores. 36% of respondents claimed to have some idea of what a credit score was but lacked in-depth knowledge, while 18% admitted to not knowing what a credit score was at all. The average age at which UK residents become aware of their credit rating was found to be 33. TSB discovered that 24% of people had been denied credit due to a low credit score, indicating that a lack of understanding could be impacting their financial lives.
Misconceptions around credit scores
TSB delved into the misconceptions people hold about credit scores and uncovered several surprising findings. Nearly half of respondents (47%) were unaware of the difference between a hard credit check and a soft credit check that doesn’t leave a record on a credit file. 23% believed that getting married would not impact their credit score when, in fact, it does. Additionally, 18% of respondents thought that frequently checking their credit score could negatively impact it, whereas there are no penalties for checking it often.
Accessing credit scores has become easier
In recent years, accessing credit scores has become more convenient for customers. Traditional credit check services are still available, but some banks now offer in-app credit score checkers. For instance, NatWest customers can access their TransUnion credit score in-app, while Monzo introduced a similar feature in February 2020 (although it was later withdrawn and placed in a paid package of services). Online credit report services also allow customers to access their credit scores conveniently.
The importance of credit scores
TSB’s research underscores the importance of understanding credit scores. Improving a credit score can be as simple as registering to vote and paying more than the minimum amount on credit accounts. It’s also crucial to avoid missing payments as these lapses can stay on a credit report for a year. Applying for too many credit products at once can also negatively impact credit scores. A low credit score can impact everyday life, making it difficult to open a UK bank account or obtain a broadband contract.
TSB’s research highlights the gaps in understanding and misconceptions around credit scores among UK consumers. As access to credit scores becomes easier, it’s essential to understand how they work and how to improve them. Taking small steps like registering to vote and avoiding missed payments can make a significant difference. A good credit score can be vital in obtaining credit and securing essential services.