The Cosmic Watchdog

Money expert Martin Lewis is urging people to check their credit file after the mindblowing revelation that people in the UK do not actually have a credit score.

Returning on the latest episode of The Martin Lewis Money Show Live on ITV1 and ITVX, Martin warned that there’s “a lot of nonsense out there about credit scores”, with the biggest myth being that you actually have one.

Instead, Martin revealed, you have a collection of credit reports based on what credit score companies know about you and what they feed to lenders, and a rough estimate of your credit worthiness, but it is only an estimate and never an exact science.

Martin warned his ITV viewers: “There’s a lot of nonsense out there about credit scores, the biggest one being, that you actually have one. You don’t. The first thing to understand is, you don’t have a credit score, right. You don’t have one. This is just as much art as it is science.

“You do not have a credit rating, you do not have a credit score in the UK. There is no single number that dictates if a lender will accept you. Each individual lender scores you differently based on its own wishlist about ‘what is a profitable customer?’ Not just about risk.”

The money expert then goes on to explain more about the kinds of tactics the credit reference agencies use.

He said: “The credit reference agencies, the three of them out there, they market a credit reference tool. Now that is a really useful indicator, but it is just their idea, a rough example of how a typical lender may look at you. It isn’t rock solid, it isn’t official.

“Now sometimes, they’re the people who are building the credit scoring system for firms so it’s a good indicator but I think people are too overly trapped in their credit score which is just one factor in the acceptance decision and it isn’t locked in.”

Martin went on to advise people to check their score once a year, unless they are making a large application, like a mortgage or remortgage, because small changes to your score are largely irrelevant anyway.

Martin continued: “Big moves in your credit score matter, small moves in your credit score don’t matter that much and often they’re transitory anyway, which is why I started with my warning, more art than science.”

And Martin did have some sage advice for those who want to know more about how companies might view them financially.

He said: “What really does matter for everyone is your credit file or credit report. You should be checking it annually and before any big applications, so on your credit file you have detail of all the financial products that you’ve got, all the credit products, whether you paid them on time, whether you missed any payments, County Court Judgments that have been put in against you, your electoral roll information, all the data that lenders are using to assess you when you apply.

“I want you to go through these reports line by line. Small errors can mean rejection – I’m talking about if you’ve got an old mobile phone contract that was closed but it’s linked to the wrong address, that could kibosh your mortgage deal.”

Martin added that for a general annual check, you should check one of the three credit agencies but if you’re going in for a big application like a remortgage, you should check all three.