Will the rise in inflation impact your credit score?
Your credit report says a lot about you. It tells lenders about your financial history, how much money you’ve ever borrowed or tried to borrow, how many late repayments you’ve made on loans or credit cards…and a lot more.
Wednesday 04 June 2014
Credit reports provide an overall credit score, a tool that lenders use as a basis for all of their credit application decisions.Each time you apply for credit, whether that’s a loan, a mortgage, a store card, a credit card, or even a mobile phone contract – your credit history is examined, as lenders make a judgement on whether to lend you the money, or agree to the contract.
In a time of increasing inflation, many of us are being forced to make important financial decisions with regards to where we put our money, and make changes to how we spend and how we save. Many of these decisions could have serious impacts on your credit score, so it’s important to consider the future implications before moving money around.
When interest is low and inflation is high, savers are often among the worst hit. Families earning low or moderate incomes may also face a situation in which their income cannot keep up with the cost of living – and it’s in these cases that it’s important to consider the impact of any actions on future credit scores. You can view your credit score using a service such as Experian CreditExpert, which provides guidance on how to keep your credit score as positive as possible.
If you’re taking out more credit cards
Your credit report details how much credit you have available to you – not just how much you’re using. This means that if you have a whole selection of credit cards, each of which you’re only using part of, the actual total credit you have available to you will appear very high. This can have a negative impact on your credit score.
If you move house
A single move is unlikely to have a major impact, however, frequently changing home or moving from rental property to rental property is another factor that will be recognised on your credit report. In general, lenders prefer to loan money to those who are relatively settled, and aren’t bouncing from place to place. You can help your case by putting yourself on the electoral role – a tool used to verify identity, as well as showing that you have committed to a particularly location enough to consider it worthwhile registering yourself there.
If you’re remortgaging your home, or applying for personal loans
Each time you apply for credit, this is recorded and can impact on your credit score. Of course, it makes complete sense to show around for the best rates if you are looking for a loan, however, it’s important ask each lender that you apply to to register this as a ‘quotation search’ and not a ‘credit application search’ on their records. This ensures that your credit report stays completely clear, and there isn’t any impact on your credit rating.
So, before you make any significant financial changes to account for the rise in inflation, consider the future implications this may have for your credit needs, and review your current credit report to ensure it’s up to date and accurate.
- 1 Kermit the Frog has a new girlfriend named Denise
- 2 The excuses your boss is most likely to believe when you call in sick
- 3 Moscow voted the world's unfriendliest city
- 4 I'm pansexual – here are the five biggest misconceptions about my sexuality
- 5 More than 11,000 Icelanders offer to house Syrian refugees to help European crisis
The one chart that shows how George Osborne is almost certainly going to be our next Prime Minister
The excuses your boss is most likely to believe when you call in sick
Three-year-old ultra-Orthodox Jewish children told 'the non-Jews' are 'evil' in worksheet produced by London school
Bono's group has made more money from Facebook investment than from all his music
Wikipedia rocked by 'rogue editors' blackmail scam targeting small businesses and celebrities
Climate change: 2015 will be the hottest year on record 'by a mile', experts say
Jeremy Corbyn calls Osama bin Laden's killing a 'tragedy' - but was it taken out of context?
Tony Blair attacks Jeremy Corbyn's 'Alice In Wonderland' politics
Theresa May says migrants should be banned from entering the UK unless they have jobs lined up
Iain Duncan Smith 'should resign over disability benefit death figures', says Jeremy Corbyn
If you're not already angry about the refugee crisis, here's a history lesson to remind you why you really should be
iJobs Money & Business
£14000 - £16000 per annum: Recruitment Genius: This company was established in...
£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...
£20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250 ...
£20000 - £25000 per annum: Recruitment Genius: We are a vibrant and establishe...