When I was starting on my journey, and I recently qualified as a doctor, one of the first purchases I would make would be to go and buy a new mobile phone. I was living in different areas of the country from my family and friends. This would be a good way to help me keep in touch.
I picked up the phone and was happy with my choice. But when I came to pay, I was told I could not purchase the phone. I was initially shocked and told by the seller that this was due to my declined credit. I had just received my first two paychecks and had the money in the bank to pay for the phone and the contract for the 12 months it would last. Despite this, they still refused to sell me the phone.
Initially, I was shocked and quite angry that I could not buy something outright despite having the money for this. They did not sell me the phone because of my poor credit at one of the credit rating agencies (CRA). My time as a student had obliterated my creditworthiness. This led to significant pain and having to learn quite quickly about how to improve my credit scores.
What are Credit Scores?
Credit scores are numerical representations of an individual’s creditworthiness. They are calculated based on various factors, such as payment history, outstanding debt, length of credit history, types of credit used, and recent credit inquiries. The resulting score is used by lenders, landlords, and other financial institutions to determine the individual’s ability to repay loans or debts.
Credit scores in the UK range from 0–999, with higher scores indicating better creditworthiness. The score depends on the specific credit reference agency, but the two main ones with their scores in the UK are as follows:
- Very Poor — 0–560
- Poor — 561–720
- Fair — 721–880
- Good — 881–960
- Excellent — 961–999
- Poor — 0–438
- Fair — 439–530